@Anonymous wrote:
@Subexistence wrote:
@Anonymous wrote:
@wasCB14 wrote:
@K-in-Boston wrote:
@Anonymous wrote:Not a good mind set. Amex will be in trouble in 10 years if they don't make any changes. Millenials and younger people are less likely to adopt an Amex compared to previous generations.
( I am getting old. I hadn't even considered the fact that there was already a generation after Millennials.) I think Amex does offer a lot of innovative products that are more in-tune with the rewards and perks-seeking crowd. While it would be nice to see a revamping of the green charge card, I agree with wasCB14 that it's likely a very high margin card for them (the swipe fees are the same as Amex's best rewards cards after all) since the cardholder doesn't get a lot out of it.
As a millenial, I can't think of any time I've seen a peer use an Amex Green. If someone has an Amex, it's likely a travel cobrand or Platinum. Value definitely matters more than image.
As a Berkshire Hathaway shareholder (and therefore, indirectly, an Amex shareholder) it doesn't bother me that Green is a poor value, so long as anything I'm paying an AF for (Schwab Platinum and SPG) remains competitive.
Green hasn't been on the cutting edge for a long, long time. It really has become more of a fashion statement/identity thing than a great way to buy stuff. Amex can milk those who keep it, and compete for the savvier crowd by improving other cards.
As both a Berkshire. And an Amex stockholder I think both companies are doing well and will so in the future. If your only card is a green charge card and you only pay the annual fee you will be doing a lot better than most people who pay interest and carry balances, I like how people claim Millenials are so savy and there are so many of them with huge student loan balances and majors that will pay less than they if just learned a trade.
Why do you think Amex will do well?
Because they have a virtual monopoly on the Corporate Charge cards. All the other major credit card players don't have any kind of economic moat. If a Chase customer gets a better deal from Citi they will leave in a second. Plus Amex not only issues the card but controls the network. And has much higher merchant fees that they can charge because they control the corporate market and the high income market. Amex has 1.8 percent of its accounts with charge offs last quarter the next best bank was Bank of America with 2.9 percent of their accounts.
If you have high income you want great customer service and that is where Amex excels.
Even on the personal side rather than the corporate side, Amex has a lot of loyal customers. Even if my current best friend (the SPG) were to disappear I don't see myself getting rid of my Amex accounts even if someone offered something better. They have always been there for me and always delivered great service.
One quick question, though, frogman. Is quarter above supposed to be year? If even the best has 1 in 13 or 14 customers (assuming 1.8% per quarter) with a chargeoff every year that is frightening!!!
Thanks for the links guys, now that makes a lot more sense. frogman1, you originally wrote:
Amex has 1.8 percent of its accounts with charge offs last quarter the next best bank was Bank of America with 2.9 percent of their accounts.
That should be corrected to:
Amex saw a 1.8% growth in their net chargeoff rate (the total dollar amount of chargeoffs minus deliquent balances recovered) last quarter. The next best bank, Bank of America, saw a 2.9% growth in their net rate.
BIG difference there, which is why I said before that that was frightening if the company doing the best with chargeoffs was still seeing 1 in 55 customers default each quarter, or 1 in 14 annually. Or put into scarier terms if those rates of default were steady, 50% of all American Express cardholders will have their accounts charged off within a 7 year period! I don't even think Credit One could fear default rates that high. So using a hypothetical gross chargeoff dollar amount (too lazy to look up actual figures if those were included) of $500 million, at 1.8% growth that rose to $509 million. Not great, but that does restore my confidence in the credit market.
Sorry, I should have used increase rather than growth in my statements above. Now I'm totally confused on the numbers and what they mean, but I do have to stand by my statement that if that were referring to a percentage of cardholders in a quarter and that continued for 7 years, exactly half of all Amex cards would be a charge off. I'm still assuming the 1.8% was net charge offs and not percent of accounts?
From investopedia:
A net charge off (NCO) is the dollar amount representing the difference between gross charge-offs and any subsequent recoveries of delinquent debt. Net charge offs refer to debt owed to a company that is unlikely to be recovered by that company. This "bad debt" often written off and classified as gross charge-offs. If, at a later date, some money is recovered on the debt, the amount is subtracted from the gross charge-offs to compute the net charge-off value.
Anybody capable of translating since we all seem to be inferring this differently?