American Express Says Late Payments Are Increasing Faster than Estimated

[marmar]

from Bloomberg:



American Express Says Late Card Payments Increasing (Update1)

By Erik Holm

June 25 (Bloomberg) -- American Express Co., the biggest U.S. credit-card company by purchases and cash advances, said customers are falling further behind on their debt, signaling the economy is worsening.

``Business conditions continue to weaken in the U.S. and so far this month we have seen credit indicators deteriorate beyond our expectations,'' Chief Executive Officer Kenneth Chenault said in a statement today announcing the company would receive as much as $1.8 billion in a settlement with competitor MasterCard Inc.

American Express and rivals Capital One Financial Corp. and Discover Financial Services have fallen more than 30 percent in the past 12 months in New York trading as consumers absorb the housing slump, rising unemployment and higher food and fuel bills. New York-based American Express adopted a ``cautious view'' for the year in January after cardholder spending slowed and overdue payments rose in December.

``If you look at the employment situation, clearly that's deteriorated, and consumer confidence is down as well,'' said Sanjay Sakhrani, an analyst with KBW Inc. in New York who has a ``market perform'' rating on the stock. ``Both play a key role in the credit-card industry.''

The U.S. lost jobs in May for a fifth month and the unemployment rate rose by the most in more than two decades. Payrolls fell by 49,000 after a 28,000 drop in April, the Labor Department said June 6. The jobless rate increased by half a point to 5.5 percent. .......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aMUrOw6EhfR0&refer=home

[NNN0LHI]

1. Restaurants around here are empty

Even at lunch time. Nobody has got any money.

Don

[OhioChick]

2. Same here.

If you take a quick trip to Target to pick something up, you're one of only a few in the store. No one has $$$$.

[arcadian]

9. The fact that Target has a row of 20 cash registers

all vacant, makes that ever so obvious while shopping there. What were they thinking putting that crap in there?

[AlCzervik]

3. same here and the supermarket has been really empty as well. It's kind of sad

and creepy.

[CountAllVotes]

4. watching food rot on the shelves at Safeway here

not that I am a big fan of Safeway mind you. I went there last week to buy one item. There were few to be found in the fancy new store. I did note an elderly lady buying about 20 cans of pineapple selling at the price of 10 cans for $10. I also noticed a huge batch of cantaloupes that were half-rotted. No one was buying those for $1.00 each nor the old corn left from last weeks sale - price jacked up to $1 an ear rather than the price of .50 cents last week.

It is just plain sad whether one likes Safeway or not. I noted the same about 2 weeks ago at the local Co-op - few customers to be found on "customer appreciation day" when you get 10% off of all items (which are overly priced to begin with anyway). :argh:

:kick:

[Paula Sims]

5. Good thing we're not in a recession

Things would be pretty bad. . .

:sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm:

[arcadian]

10. I saw an "article" on AOL front page

it said something to the effect, "even if we are in this seeming recession". They called it a "seeming recession". Fucking asshole corporate execs and their Madison Ave toadies.

[DJ13]

6. Maybe, just maybe, if credit card cards didnt charge 30% interest...

......more people could afford to pay every month?

Less write offs of accounts, a more stable income stream from your credit card business, all for the cost of reasonable rates.

Just a suggestion.

[taught_me_patience]

8. Who pays 30%?

Seriously, only the worst credit risks pay that amount. Most credit cards that I own are 10%-20%. Do you think companies should charge less for more risk? The managers at American Express are the most seasoned veterans of the credit card business, I think they should know how to price risk...

[shraby]

11. We always paid on time on the credit cards

until we found they were asking 25% interest on good credit. That's when we paid them all off and got rid of them. That's usury no matter how you cut it, and since then I've read where they upped the percent again on cards.

[KharmaTrain]

7. Many More Are Paying For Necessities On The Card

While people aren't going to the mall or taking the nice vacation, they're still using the cards...for gas, paying utilities, food and other things that they either wrote a check or paid cash for. Recently I heard a report that said that consumer debt was growing at an alarming rate that the major lenders not only can't control but are trying to downplay...many of the same companies that have their financial tits in the ringers over the real estate fiasco.

It'll be quite a balancing act if people start defaulting and walking away on their card debt like some are doing with their homes. The cases of people falling into the 30, 60 and 90 day holes have grown and these companies are getting hard-pressed to follow up on all these pending defaults. In many cases, they're willing to renegotiate interest payments, but the defaults now include a large amount of principal that the credit card companies will have to cover (or their insurance companies). Predatory lending on cards is just as bad, if not worse than what we saw in the housing market and consumer debt has long been a shell game that now is catching up with the big banks.