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Amex Paying Customers $300 to Cancel

Mar 11 2009

Amex Paying Customers $300 to Cancel

American Express is having trouble with some of their riskiest customers and fear these bad accounts will drag down the company profits/losses further. Near the end of February, according to reports, Amex offered $300 to these clients that will payoff their accounts and close them by the end of April. Credit Card companies like American Express are also in fear that customers that loose their jobs will increase their borrowing pushing their accounts into a riskier position and defaulting more often.

American Express (AXP) Falls

Shares of American Express (AXP) fell today around 1.5% after rallying the past two days from $9.71 a share to $12.15 a share. The price of $9.71 a share represented the lowest price for the shares over the past 52 weeks. Revenue for the company is expected to fall 4.4% this year with earnings collapsing 56%. Analysts have decreased their expectations from $2.15 a share in profit for the year down to current expectations of $1.05 a share. Credit issuers have not been hit as hard as the holders of bad mortgage securities but fears of their assets turning sour along with rising unemployment has led to the downward earnings revisions. Look for credit card issuers to continue to struggle for next couple of quarters.

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