AmEx paying card holders to close their accounts

[via reuters]

American Express Co, battered by mounting credit card losses, is offering $300 to a limited number of U.S. 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 costumers overall credit profile."

The company did not say how many card holders would receive the offer and did not disclose the total of their card balances.

Card holders have until the end of February to accept the offer and must close their accounts in March or April. Each card holder 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 U.S. unemployment increased and the global economy deteriorated.

Like its credit card rivals such as Discover Financial Services, Capital One Financial Corp, JPMorgan Chase & Co and Citigroup Inc, American Express is selectively scaling back the credit lines of some U.S. customers and reducing efforts to gain new customers domestically.

The firm is cutting expenses, aiming to save $1.8 billion in 2009.

American Express shares fell 3 percent to $12.58 in afternoon trading on the New York Stock Exchange. The shares have lost a third of their value this year.

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