DYSPEPSIA GENERATION

We have seen the future, and it sucks.

Crunching credit

24th February 2009

Megan McArdle squints at American Express.

It used to be that credit-card companies lured customers with cash rewards. Now American Express Co. is paying to get rid of them. The card issuer is offering selected customers a $300 AmEx prepaid gift card if they pay off their balances and close their accounts.

And why, you might ask, do they do this seemingly unbusinesslike thing?

I am also willing to bet that we see a whole lot more of this if Congress gives bankruptcy judges the ability to cram down mortgages in Chapter 13, as they almost certainly will.  The provision is going to attract a lot more people into bankruptcy, and those people are going to shed a lot of their unsecured (read:  credit card) debt.  I’d expect that credit card lenders are already desperately trying to weed out those most likely to enter Chapter 13.

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