AmEx sees fewer charges, greater delinquencies
American Express sounded a serious warning for the payment card industry yesterday, acknowledging that its cardholders both reduced their spending and were less able to pay their credit card bills in the final month of 2007.
“Cardmember spending began to slow and delinquencies and loan write-offs trended upward during December,” AmEx said in a press release. American Express said that in an effort to cover bad loans, it will take a pre-tax charge of approximately $440 million in the fourth quarter.
The announcement from American Express comes on the heels of a similar alert from fellow credit card issuer Capital One.
American Express cited the weaker U.S. economy in its press release. As The Wall Street Journal reported, “In a conference call yesterday afternoon, Daniel Henry, chief financial officer of AmEx, said the troubles were broad-based and sudden. Most of the problems came from consumer and small-business customers.”
AmEx expects the tough times to continue. The company said it is “adopting a more cautious view for 2008,” adding that it “expects that growth in cardmember spending will slow in the year ahead.”