The relationship between you and your credit card company may have just become a little more fractious.
A report yesterday from the online site creditmattersblog.com - confirmed by other media outlets - says that American Express is offering to pay some customers a $300 gift card to close their accounts. Those customers, who will receive notification of the offer by mail, must agree to pay off their revolving balances by April 30, and they will forfeit all rewards points.
In short: American Express is handing out scissors to cut up their cards.
On its Web site, Amex explains this extraordinary measure as helpfully giving customers the chance to "simplify your finances." Doing so also helps Amex reduce risk of defaults, which continue to burden credit card companies as the recession deepens.
Why doesn't Amex just close the accounts? Giving $300 to the customer encourages them to pay down revolving balances, so Amex wins both ways.
It's the starkest of several measures credit card companies are taking to cut debt and lessen risk, including an apparent increase in customers seeing their interest rates suddenly spike, even if they've kept current on all their payments.
"It's pretty much everybody now getting those increases," says Emily Peters of San Francisco-based Credit.com. "A year ago, it was just the good customers who had balances and low rates."
Peters suggests checking recent statements to see if your credit card company has been nibbling in other ways. In a survey to be released next week, Credit.com says that one third of respondents found some sort of negative change on their credit card statement, such as an interest rate change or increase in fee. "Imagine how many people might not be tuned into that," Peters says.
What are your options if your interest rate spikes? Not many. You can hunt for a better rate on another card, but good deals are difficult to find in this climate. You can call your credit card company and negotiate/yell/threaten to cancel your card - but even the best customers aren't as valuable as they once were.
What you should not do is work yourself into a huff, nor think too hard about banks taking billions of bailout dollars only to stifle the commerce this economy needs by jacking up rates, and decide to cancel that card in protest. Closing accounts (including you, Amex card holders) can take dozens of points off your credit score.
The best option? Pay off your revolving balances, so high interest rates become meaningless.
Then remember the increase when the economy improves and the credit card company begins to like you again.
Tell us your credit card story. Had a big rate hike recently? Find some new fees?