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American Express Will Be forced to Cut Credit due to new laws

Established Contributor

American Express Will Be forced to Cut Credit due to new laws

New card law "more negative than positive" for company

* Customers who need credit might find it harder to get

* American Express shares fall 3.3 percent

By Jonathan Stempel

NEW YORK, May 20 (Reuters) - American Express Co (AXP.N) Chief Executive Kenneth Chenault said a new law that would impose sweeping limits on credit card issuers will likely hurt his company and reduce the flow of credit to consumers.

Chenault said the legislation will be "more negative than positive" for American Express, because it will make it more difficult for the credit card and travel services company to set rates based on the risk its customers pose.

"At the end of the day, to be perfectly honest, it's more negative than positive," Chenault said Wednesday on a conference call hosted by Calyon Securities. "We will be hurt less than our competitors because 80 percent of our revenues are generated from fees."
Message 1 of 22
21 REPLIES
Established Member

Re: American Express Will Be forced to Cut Credit due to new laws


plasticguy wrote:
  "We will be hurt less than our competitors because 80 percent of our revenues are generated from fees."

And that"s the important sentence. Also with the focus on the charge card business they have much less credit loss than other companys.

Message 2 of 22
Established Contributor

Re: American Express Will Be forced to Cut Credit due to new laws

They should have more clearly  define "fees" is most of that 80% AFs and Merchant fees or penalty fees fees

Know their business model, most of us know it's first,But in the land of credit just saying "most of your profits are from fees" just doesn't good .it feels subprime

People say "Only apply for credit you NEED"

I say "apply for credit you have PRATICAL use of"

I don't have AMEX card because I don't want a card that suffers from PMS
Message 3 of 22
Moderator Emerita

Re: American Express Will Be forced to Cut Credit due to new laws

Fascinating to read the wails of despair from CC-issuers these days.

They have a pretty savvy PR firm, it appears.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 4 of 22
Established Contributor

Re: American Express Will Be forced to Cut Credit due to new laws


rbbyrbsn wrote:

They should have more clearly  define "fees" is most of that 80% AFs and Merchant fees or penalty fees fees

Know their business model, most of us know it's first,But in the land of credit just saying "most of your profits are from fees" just doesn't good .it feels subprime


Smiley Very Happy I had to chuckle when I read that too. "What do American Express and First Premier have in common? Answer: More than 80% of their revenue comes from fees."

Message 5 of 22
Established Member

Re: American Express Will Be forced to Cut Credit due to new laws

Did that guy actually say that customers who need credit won't get it?

 

Please!  These boards are full of comments from stellar AMEX customers for whom AMEX has found it appropriate to raise interest rates, decrease limits, freeze accounts, and on and on!  AMEX is already taking credit away from good, proven customers!  Why would they worry about new, unproven ones and getting business from them? 

Message 6 of 22
Frequent Contributor

Re: American Express Will Be forced to Cut Credit due to new laws

Who cares about amex? I will love to see them out of business.
Message 7 of 22
Valued Contributor

Re: American Express Will Be forced to Cut Credit due to new laws

I will second that.

 

 

 

New York Yankees - 2009 World Series Champions. 27... and counting.....
Message 8 of 22
Frequent Contributor

Re: American Express Will Be forced to Cut Credit due to new laws

 Actually I  find it kind of funny that so many people are railing on AMEX, when 6 months ago they would be [edited], pay the annual fee, etc just because they thought it "said something about them".

 

I remember my son in college several years ago bragging how he had just got an AMEX card and how "prestigious" it was. I asked him how "prestigious" a credit card can be when they give it to college kids who have never held a job, are deep in debt and have no credit history.

 

Kinda makes one think.Smiley Happy

Message Edited by sidewinder on 05-21-2009 09:11 AM
Message 9 of 22
Regular Contributor

Re: American Express Will Be forced to Cut Credit due to new laws


nathan wrote:
Who cares about amex? I will love to see them out of business.

 

Me too! Since I owe them $25k on a business account which I have the money to pay but am only paying $1,000 a month. They just offered me $800 (4 months of finance charges) if I pay $12k on it. Then they will reduce my limit to $14k and GUARANTEE I will have that limit for a year.

 

Nope - The interest is tax deductible business expense, so I'll pay it as I see fit

Message 10 of 22