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.