American Express is Paying Customers to Cancel Their Credit Cards

In the last 7 months, the economy has certain taken some bizarre swings. The Federal Reserve’s target rate is now 0%, the stock market is half of what it used to be, and unemployment is shooting through the roof, but now there’s one thing that should really cause consumers to take notice of strange economic events occurring.

American Express, one of the largest issuers of credit cards in the United States, is actually sending out letters to certain customers and offering them $300.00 to pay off their balances and cancel their credit cards. AmEx won’t say how many customers they’re sending these letters to, but it’s likely that they are targeting customers who are statistically likely to get behind and not pay off their debt.

Just a couple of years ago, the credit card industry was sending out a total of 7 billion solicitations for new credit cards every single year (that’s 19 million per day!). Credit card companies were so desperate to get people addicted to their forms of payments that they would issue cards to college students who had no income or financial education. Many credit card companies didn’t even check people’s credit scores before sending them out a credit card. There are people that signed their pets up for credit cards, and were accepted!

American Express is concerned about the possibility that the customers that are targeting will default on their loans. These people are likely only paying the minimums or just above that on their accounts each month. The company is hoping to reduce the amount of exposure that it has to customers that have a high potentiality of defaulting on their loans.

The terms of the offer require customers to pay off their entire balances within sixty days of accepting the agreement to get the $300.00. American Express isn’t even concerned -how- customers pay off their debt, even if they balance-transfer it to a different credit card at another bank.

If you have received one of these offers in the mail and have another credit card that you can transfer the balance to, go ahead and take the deal, it’s a free $300.00! You might even have the ability to get a special balance transfer offer from a credit card company that would lower your interest rate. However, remember that it’s not a lower interest rate that will ultimately pay off your credit cards, but large principal payments by paying extra each month that will clean them up once and for all.