Is Amex in decline?

[smc733]

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@Anonymous wrote:

Remember when centurion used to be this magical card that would get you a free upgrade to first class on any airline? Remember when it would provide a domestic companion ticket? Ive read several things about it from past holders. They all seem to say the same thing: the benefits go down but the price goes up.

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Speaking of Centurion...

Apparently the first "wave" of people originally invited were given an annual fee of $1,000, with a promise in their welcome packet as being the "original" or some word members, they would never see the AF increase.  

One year the annual fee went from $1,000>$2,500.  The following year, those original members got a notice that the AF went to $2,500 and they could either cancel the card or pay the fee.

They made a promise and broke it, just goes to show they can do whatever they feel like.

Personally, I get nothing but foreign call centers on my BCE, I find much better service from BofA and Discover.  I only still keep my low-limit Amex for the extended warranty.

[Anonymous]

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@LS2982 wrote:

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@CreditScholar wrote:

After reading some of the posts about overseas call centres, poor CS and the like, it got me thinking... Is Amex in decline, even if it's a very slow one?

They used to be undisputed when it came to being at the top of the pile. Now it's not so clear-cut anymore. Lately I hear more and more about them "cutting corners", see them taking people with lower FICOs, etc.

Anyone have any ideas on this?

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I wouldn't say this is putting them on the decline, in fact it should be making themmore positive to the consumers. You have to give someone a chance eventually if they are showing they are being more responsible and taking care of their finances.

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I would also say that there are many people who have a history of being creditworthy but experienced a bump in the road, with resulting blemishes on their reports, as a result of the economic disaster of 2008. Some of those people have managed to dust themselves off and are well along on the road to rebuilding. Thus, there is a pool of potential customers out there who do not have spotless histories, but nevertheless might prove to be creditworthy currently. I have to think that lenders are aware of this and are beginning to take it into account.

[espnjunkie]

I believe that AMEX charge card products may be in decline, especially with the younger generation. The annual fees for most of the charge card products are significantly higher than competing lenders charge. I plan on keeping my Green card for a year and then applying for Starwood Preferred Guest Amex. It has a 65.00 annual fee instead of 95.00, you have the option of revolving your balance, you get pretty much all of the same standard AMEX benefits, a 20% point bonus when you transfer 20,000 starpoints to ff programs, and a favorable conversion rate for hotel stays. So what the heck would I or anyone else be paying 95.00 or higher for really? More airlines, more hotel benefits, ability to carry a balance if desired (I know you can on chrage cards but they are not intended to), I don't see much reason to keep a charge card for much longer and get stuck with the fees.

[Anonymous]

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@Open123 wrote:

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@CreditScholar wrote:

Anyone have any ideas on this?

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I do, but it's pure conjecture.

Currently, the biggest risk to AmEx's business model is the lawsuit filed by the DOJ alleging Amex has an anti-competitive effect on the market.  Namely, the agreement where a merchant cannot openly offer a discount on the sale price to a customer for paying cash or using another card, if they have the "welcome" Amex sign on their front door.

This lawsuit is detrimental to Amex's spend-centric business model should the DOJ prevail where a court ruling would mandate merchants be allowed to offer discounts to customers for using other forms of non-Amex payments while also having the "welcome Amex" sign to draw in affluent spenders.

In my view, part of the fight for Amex in court will also take place in the court of public opinion.  The DOJ is essentially implying Amex is an organization that redistributes wealth from the lesser spenders to the higher ones.  The rewards structure increases the cost of goods for those paying with cash and non Amex while transferring them to Amex cardholders purely because they have or are in the position to spend more money.  Amex's defense is their higher costs actually helps merchants and small businesses drive sales thereby allowing them to hire more people--think trickle down theory and Laffer curve.

Aside from the court battle, Amex is also waging the fight in the court of public opinion.  Until then, Amex needs to show they are not the company of "elites," but provide valuable fuel to the engine of the small business owner, and is the card of choice of "everyman," and not just Mr. Affluent Corp, or Mr. Big Money Centurion.  Part of that effort necessitates taking on the younger generation, and many cardholders whom they may not have in the past.  They need to diversify their customer base, and have data to support their argument that cardholders range from ever spectrum of life, ethnicity, income, and age group.  

The efforts of the prepaid I believe is for them to argue they're even making strides to offering services to the under and unbanked.  Surely, no institution providing card services to such a wide varied group of people could be considered elitist or anti-competitive.

In my view, all of this is part of their strategy to fight the DOJ's allegations both in Federal Court and the Court of Public Opinion.  Take the hard $200 limit on the Zync. The Amex of old would close your card if you didn't spend more than $200/month, let alone making it where you can't even spend more.  

These efforts have diverted and stretched thin some of Amex's resources.  I think it shows most vividly on some of the less than professional experiences some have encountered when calling into the CR department, which has historically been an Amex strength.

This is just conjecture and not factual based, so please take it with a healthy grain or two of salt!

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Due to the durbin amendment merchants can offer discounts for customers paying in cash so that argument that AMEX is anti competitive because they do not allow a merchant to have a cash discount is not true anymore. Lots of places don't take AMEX so there is no anti competitive practices there since a merchant freely chooses to accept AMEX or not.

I think it is a good thing AMEX is going after non traditional customers for them. Particularly the prepaid debit card business. Prepaid cards are not looking good to a lot of people because they charge fees for everything, sort of like payday loans and check cashing places. Outrageous fees on people who can least afford it. But AMEX's prepaid card comes with no monthly fees from what I understand, or maybe if they do they are easy to avoid.

I agree AMEX is not what they once were. Aside from the BCE/BCP for the cashback or AMEX platinum for the perks I can get better rewards from other banks with lower annual fees.

[Open123]

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@Anonymous wrote:

Due to the durbin amendment merchants can offer discounts for customers paying in cash so that argument that AMEX is anti competitive because they do not allow a merchant to have a cash discount is not true anymore. Lots of places don't take AMEX so there is no anti competitive practices there since a merchant freely chooses to accept AMEX or not.

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No, I meant that is part of the agreement to take Amex (or, have the Amex blue box advertised as a form of payment) the merchant cannot suggest, imply, or offer a discout to accept "another" form of payment.

But, Amex as part of the user's agreement binds them to these conditions, If the merchant doesn't agree, then they are free to not take Amex.

What the DOJ is trying to force Amex to do is allow the merchant to advertise the Amex branding to bring in big spenders, then be free to offer them a discount if they use cash, visa, mc, or discover.

Basically, what some merchants want is to draw in big AmEx spenders with the branding on the door, then offer them a discount to pay cash or another card.  If I were AmEx, I wouldn't allow this freeriding spillover to my competitors either.

Again, as a merchant, you are free to offer cash discounts.  Amex as a vendor, is free to stipulate conditions on how you accept their cards.  For instance, it is against the user agreement to check ID.  Amex isn't opposed, but if a cardholder is under no obligation to show any kind of photo id if the card is accepted through the network.  

If a cardholder complains, it is in violation of the merchant agreement.  Amex can (they can do this for any reason regardless) cancel the merchant account and not allow them to take the Amex card, or use the Amex network.

[Anonymous]

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@espnjunkie wrote:

I believe that AMEX charge card products may be in decline, especially with the younger generation. The annual fees for most of the charge card products are significantly higher than competing lenders charge. I plan on keeping my Green card for a year and then applying for Starwood Preferred Guest Amex. It has a 65.00 annual fee instead of 95.00, you have the option of revolving your balance, you get pretty much all of the same standard AMEX benefits, a 20% point bonus when you transfer 20,000 starpoints to ff programs, and a favorable conversion rate for hotel stays. So what the heck would I or anyone else be paying 95.00 or higher for really? More airlines, more hotel benefits, ability to carry a balance if desired (I know you can on chrage cards but they are not intended to), I don't see much reason to keep a charge card for much longer and get stuck with the fees.

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You make some excellent points.  I've read that the most popular card among Amex employees is the Starwood Preferred Guest.  If I had to pick a "best" Amex, it would probably be the SPG.  The charge cards, particularly Green and Gold really seem dated now.  They used to be very good in the past, but now there are so many other choices that are equal to or better.  Zync is relevant because it is cheap and good for non-travelers.  Platinum is still nice for the extra benefits if you travel.  

I think Amex needs to offer products like Zync and Blue because young people today are becoming more careful with money.  Even if they have good credit and make good money, they're not going to throw it away on a high annual fee card if it's not worth it.  Why am I paying $95 or $125 for a Green/Gold when I could pay $0/$65/$75 for a Blue Cash, SPG, or Blue Cash Preferred which would give me better rewards and similar benefits?  If Amex wants to grow and not lose market share it needs to market the latter group of cards to younger people with good credit, not the outdated and overpriced charge cards.  As for offering the Zync to those with lower credit scores, it may dillute the exclusivity of Amex, but I think it is a good move.  It helps people establishing credit or those who need to rebuild after the recession get into or back into cardmembership and Amex has always had high customer retention rates.  Lastly, Amex's exclusivity has always been exaggerated by marketing hype.  The only high end card that is hard to get is the Centurion.  Platinum only requires someone with a low-prime credit score, you just have to be willing to pay the fee.  The free Blue card is typically harder to qualify for.

[espnjunkie]

My credit history is relatively short and I just got my AMEX green about a month ago. Would a year of history with AMEX be enough for them to approve me for the SPG card? I have been reading about it and the benefits seem to be better than the green and with a 30.00 less annual fee. I know it's too soon for me to apply for it now, but is six month or a year of history with amex recommended? I'm guessing to give it a shot a year from now before the annual fee for green hits.

[Anonymous]

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@espnjunkie wrote:

My credit history is relatively short and I just got my AMEX green about a month ago. Would a year of history with AMEX be enough for them to approve me for the SPG card? I have been reading about it and the benefits seem to be better than the green and with a 30.00 less annual fee. I know it's too soon for me to apply for it now, but is six month or a year of history with amex recommended? I'm guessing to give it a shot a year from now before the annual fee for green hits.

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One year should be, that's what I would do, apply for it right before your Green's annual fee hits.

[Anonymous]

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@espnjunkie wrote:

My credit history is relatively short and I just got my AMEX green about a month ago. Would a year of history with AMEX be enough for them to approve me for the SPG card? I have been reading about it and the benefits seem to be better than the green and with a 30.00 less annual fee. I know it's too soon for me to apply for it now, but is six month or a year of history with amex recommended? I'm guessing to give it a shot a year from now before the annual fee for green hits.

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I would say so if nothing bad is on your report. If possible, try in Sept. They usually have a really good offer then.

[Anonymous]

This was in 1980... and you think Amex is in decline now?

http://www.youtube.com/watch?v=ZF-U9nL9Ios

The American Express strapline in Britain at the time was "That'll do nicely sir".

Mike