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AmEx Sees Red as Cardholders Struggle

Credit card company is seeing more cards fall delinquent as economy worsens

By Jim O'Neill,  Newser User

Posted Oct 20, 2008 7:58 AM CDT
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(Newser) – American Express—expected today to report earnings skidded more than 30% from the third quarter a year ago—isn't quite the industry gem it once was, reports the Wall Street Journal. The company, long a top performer who catered to affluent customers, has seen a surge in delinquencies as the economy has gone from bad to worse. It's a problem not unlike those faced by card issuers JP Morgan and Capital One, but one exacerbated by AmEx's position as a stand-alone card company.

AmEx says its delinquent loans grew to 4.1% from 2.5% a year ago, which, while better than the industry average, is sending a ripple of worry though investors. The company has begun profiling customers and, in many cases, imposing monthly spending limits. It has also cut back on its rewards programs, canceling less-popular perks.

An American Express card welcome sign is seen above all others at McGerks Pub & Grill in this Jan. 22, 2007 file photo in Baltimore.
An American Express card welcome sign is seen above all others at McGerks Pub & Grill in this Jan. 22, 2007 file photo in Baltimore.   (AP Photo/Chris Gardner, file)
An American Express card is shown on July 24, 2006 in New York CIty.
An American Express card is shown on July 24, 2006 in New York CIty.   (Getty Images)
Kenneth Chenault, Chief Executive Officer of American Express.
Kenneth Chenault, Chief Executive Officer of American Express.   (AP Photo/Stuart Ramson, file)
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