Amex says "I don't love you anymore"

AmEx Encourages Cardholders to Leave
By Mary Pilon, The Wall Street Journal

It used to be that credit-card companies lured customers with cash rewards. Now American Express (AXP) American Express Company 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.
The unusual move underscores how quickly conditions have deteriorated in the credit-card market. The current economic morass was provoked by spiking mortgage defaults. But as the economic crisis widens and unemployment climbs, there is growing concern that credit-card defaults will soar into the stratosphere as well.
"This is a huge paradigm shift," says Curtis Arnold, founder of CardRatings.com, a credit-card review Web site. He says he expects other large companies to follow suit with offers to entice consumers to pay off their balances, as card issuers cope with increasing defaults.
Selected members -- the company wouldn't disclose how many -- began receiving letters with the voluntary offer earlier this month, according to Molly Faust, an American Express spokeswoman. "It's a relatively small number of cardmembers who have sizeable balances and little spending and payment activity," she says.
AmEx declined to disclose the specific criteria used to determine who is eligible for the offer. However, Ms. Faust did say that it was offered only to retail credit-card holders, not corporate accounts. Customers who received the offer have until Feb. 28 to respond.
Each letter came with an RSVP code that, when submitted online, immediately cancels that member's card. Members have from March 1 to April 30 to pay off their balances and receive the prepaid card. During that time, the balance is subject to the same interest rates and fees that it would be if they chose to keep their card. If customers don't pay off their balance by April 30, they will not get the gift card and their accounts will still be closed, says Ms. Faust.
Closing a line of credit generally hurts customer credit scores, even if the customers do it themselves. As soon as eligible AmEx customers sign up for the offer, they lose all Membership Reward points accumulated while they were customers, Ms. Faust says. That means customers should use up their points before agreeing to the offer.
"The intention is to help cardholders lower their debt and encourage responsible management of their credit," says Ms. Faust. It's being promoted as a means for customers to "simplify their finances."
Consumer advocates see it another way. "It's a nice way of saying, 'We want you out and we want to entice you financially to get out,'" says Mr. Arnold of CardRatings.com. "It's not about them handing out $300 out of the kindness of their hearts."
AmEx is one of several credit-card issuers that have closed accounts and increased late fees and interest rates for cash advances in recent months. After converting into a bank-holding company late last year, AmEx received $3.4 billion from the U.S. Treasury's Troubled Asset Relief Program in exchange for a stake in the company.

 

I read your post but you are talking about an entirely different animal. The offer I referred to is only made to accounts that are in good standing, not those in default and turned over to a collection agency as yours is.

While good credit and high scores are important, those who have high scores are soon going to find that their high scores are likely to work against them if they don't also have other factors going for them such as a high income and a great debt/income ratio.

Fico is also going to play a major role in making the economic recovery become much deeper and longer lasting than it otherwise might have if it were not for FICO and the credit bureaus. It worked great for the lenders when times were good but now it will turn around and bite them hard. Here is why. During the depression and the days up until 1942 people were cash strapped and jobs were hard to come by. Nobody would extend credit unless you were well known in your community and at least fairly wealthy. Farmers became eligible for credit long before anyone else. They were the producers. They had money when nobody else did. They suffered little during the depression because they could grow their own food. They also got government subsidies, some of which still exist today.

Economic recovery depends on people spending money and if nobody has much money somebody must extend credit so they can spend. The more difficult lenders make it to borrow money the longer the depression will last and the worse it's effects will be.

Those who are watching the stock market averages such as the DOW and understand it know that the DOW threatened to drop well below the 7,000 mark at the close of last week. It dropped badly again on Monday but a 236 point rally blossomed forth yesterday. In only one day the pundits are talking about the end of the recession and how the recovery may now be on the way. I think we might indeed see a continuance of that rally for the next few days but any such rally is based on the technicals but the fundamentals are not there to sustain it. The crash will resume all too soon. But back to your problem.

You are 65 and on a pension. They can't force you to pay by garnishment of your pension money. Nobody can garnish pension money except government itself. They can't even threaten to take pension money let alone do it. You probably can't borrow money right now and you won't be able to do so for quite a while to come and maybe never regardless of your credit scores because you don't have the income to back up the score you have now. You are basically judgment proof unless you have more than one vehicle, boats, gun, stamp or coin collections, valuable furniture or other valuable assets. If you have stocks or other equities you should sell them immediately while they still have some value because the market is likely to drop much more yet. Cash is king now and it is likely that pensioners will soon become the nations wealthiest class. They are likely to have more disposable income than most other Americans.

You need to think about how to defend what you have, not about borrowing money to pay off some piddling debt. Don't put yourself in debt for any reason right now. This depression is going to last another two or three years or more before any recovery can happen. By that time the debt will be so old it won't matter anymore. If you borrow money you will only dig your hole that much deeper. If you are in the hole now then for heaven's sake stop digging it deeper.

 

Peeper didn't listen to what I told him to do in the first place. Now he has a plight but due to the fact that he has nothing they can't get anything either. You are correct in thinking that they could put a lien on the house but the chances that Missouri law would allow them to sell the house are slim to none.
Of course, you could put your own lien on the house for about $150,000 and if they tried to take it they would have to pay off your lien first. They would not even think of doing that.

Of course you won't listen to that advice any more than Peeper did so I suppose that taking out a home equity loan is about all that is left for you to do.

That will most likely prove to be an impossible dream with the credit markets in the shape they are today. Banks aren't anxious to loan out money these days. Do whatever you think you have to do. Best wishes and I do sincerely hope it works for you.