25 February,2009 11:41 AM IST | | Agencies
American Express Co, battered by mounting credit card losses, is offering $300 (Rs 14,975) to a limited number of US card holders who pay off their balances and close their accounts, the company said on Monday.
"We sent the offer out to a select number of card members," said Molly Faust, a company spokeswoman. "We are looking at different ways that we can manage credit risk based on the customers overall credit profile."
The company did not say how many cardholders would receive the offer and did not disclose the total of their card balances.
Cardholders have until the end of February to accept the offer and must close their accounts in March or April. Each cardholder will receive a $300 pre-paid American Express card.
American Express, often seen as catering to relatively wealthy customers and companies, has been expanding its credit card business in recent years by reaching out to a wider range of clients.
But that strategy has backfired. The company's earnings tumbled in the fourth quarter as credit losses jumped and debt-burdened consumers slashed spending.
In addition, American Express reported last week that credit card delinquencies rose in January more than analysts expected, as US unemployment increased and the global economy deteriorated.
Like its credit card rivals such as Discover Financial, Capital One Financial Corp, JPMorgan Chase & Co and Citigroup Inc American Express is selectively scaling back the credit lines of some US customers and reducing efforts to gain new customers domestically.u00a0
The firm is cutting expenses, aiming to save $1.8 billion in 2009. American Express shares fell 3 per cent to $12.58 in afternoon trading on the New York Stock Exchange. The shares have lost a third of their value this year.u00a0
