American Express Feels Credit Crunch

With defaults on rise, company taking hefty fourth-quarter charge
By Matt Cantor,  Newser User
Posted Jan 10, 2008 7:33 PM CST
Signs for American Express, Master Card and Visa credit cards are shown on a New York store's door on in this July 23, 2007 file photo. (AP Photo/Mark Lennihan, file)   (Associated Press)
camera-icon View 2 more images

(Newser) – With consumer spending slowing and credit defaults on the rise, American Express said today it will take a fourth-quarter charge of $275 million to build up its charge-card reserves, the Wall Street Journal reports. The company, which cited housing turmoil as a contributing factor, also predicted earnings to come in lower than analysts' estimates.

Though “overall cardmember spending” stayed sound, said chief Kenneth Chenault, “we did see some negative credit trends among US consumers during December, particularly in California, Florida, and other parts of the country most affected by the housing downturn.” The company expects fourth-quarter per-share earnings to be 70-72 cents, down from last year's 73 cents and well under analysts' estimates of 87 cents.