How safe are our points

[kingate]

In view of the world economic problems, how secure are our points with amex, can anyone add light to the situation.

 

[simongr]

Any business could under in the current environment. The cost of borrowing between financial institutions is rapidly increasing and the amount of debt available is reducing so Amex could be at risk.

However they are unlikely to have write offs directly related to sub-prime mortgages (unless of course they did actually invest in bad mortgages) so that should help.

The biggest risk I think is if the cost of them doing business rises and the recession impacts volume of business then they may make points transfers more expensive.

I am not too worried though. I am more concerned about having a mortgage with an institution going belly up.

 

[snufl]

In view of the world economic problems, how secure are our points with amex, can anyone add light to the situation.

In view of the world economic problems I'm carefully watching a number of things (eg. my super and the aussie dollar) but Amex points would be way down at the bottom of the list. I suppose I could also wonder how safe my points are with the airlines. Personally, I'm not worrying about points and unfortunately I doubt anyone could give an informed or accurate answer.

 

[Evan]

I am not too worried though. I am more concerned about having a mortgage with an institution going belly up.

Why is this ? (remember i am an IT person not an accountant !)
I would have thought if your morgage provider whent belly up you were then to become a creditor and as such they would demand the money owed (ie outstanding morgage amount) and then you could re-finance ?

The re-finance could be more expensive... may not be.

Am i missing something here ? something i should be concerned over ??

E

 

[equus]

You would become a debtor, not a creditor - you owe them money. However, unless you have an overdraft or other at-call type loan, your loan would be a contract requiring repayment over a defined term - typically 25 to 30 years. Unless you default, and give the cause to have the total immediately payable, then you just keep making your payments to the administrator/receiver/liquidator.

You may have a problem and want to refinance if the interest rate is variable, and goes to an uncompetitive rate, but there are protections which should prevent that in any event.

You would have much more to worry about if you were actually a creditor - and had money on deposit. In Australia, that is not too much of a concern, as the Bank deposit holders have first call on the assets of the bank - ahead of even secured creditors, in the event of a collapse. With the Reserve Bank acting as lender of last resort, in effect (and despite the hysteria about no Government guarantee of deposits), the worst case scenario would be a bank in trouble being forced to borrow from the RBA to repay depositors - who would rank ahead of the RBA.

Of course, if you are talking about a Non-Bank Financial Institution (Credit Union, Building Society etc), then the above does not apply.

 

[simongr]

My thought process oes like this - and I am not sure that there is an exposure.

But I owe money to an institution. If that institution goes bankrupt then the liquidators who will be brought in by the people the institution borrowed money will try and turn all assets into cash. My concern is that in the event of this happening the liquidators might be able to call in the debts owed - thus leaving me to find the funds to pay off the mortgage. In the current climate my house is worth less than I paid so harder to find the funds.

I am not saying this will happen but I have a lot of time on the train to worry about things. My mortgage company is no longer selling mortgages and is owned by Merrill Lynch...which might put me in a good position given that they have already been bailed out...

 

[Evan]

Opps, yes a debtor
Ok i see your point if your property value is low and your equity is low.
It could be a problem. But i can still rest easy for now... ok i lost a bundle in super etc... but i am much younger than others so it will recover or i will make it up somehow.
E

 

[alexplat]

If your mortgage provider goes belly-up liquidators will no doubt sell the assets to other companies (including the loan agreement you have with them).

 

[albatross710]

I am sure that the Ansett collapse is still fresh in peoples' minds for the number of points lost in that. I still have my memory of 250,000 points going, going, gone. I was saving points for a 4 PAX holiday.

Judging by the number of posts and responses on that Amex 10,000 point bonus thread, I think Amex is doing a pretty good volume of transactions and they are the most expensive card for the card holder and the merchant.

 

[JohnK]

Amex although a large company is not immune from the global economic crisis. Whilst I am not that worried I think Amex and MR points are relatively safe.

I have been saving the Amex MR points to use on a RTW trip in a few years time....