Monday, February 23

American Express' new assumptions

American Express is offering a $300 pre-paid card to some of its customers if they will pay off their high credit card balances between March 1st and the end of April.

This suggests that at least one credit provider is starting to look at their approach to business in a new light. It's not healthy for either the customer or the company if the cardholder is carrying an outrageous card balance. The chance of default goes up in correlation with the outstanding balance.

Why didn't they see this before? The previous assumption was that the consumer's net worth would always increase and that generally speaking the value of their assets would continue to grow. The current economic hic-up has proven that assumption wrong. So now the company better recognizes that perhaps the customer's best interest are also their own. It sometimes takes a crisis to revive common sense.

No comments: