With all the problems and drama, who wants an Amex card anymore?

Along with the market hitting a 12 year low today, the credit market has taken more hits.  One story that came out today, I thought to be especially telling.  American Express has started paying people to close their accounts.

American Express has been dealing with their own issues for a while.  I have first hand experience in dealing with American Express fickleness with credit lines.  They like to give them, then restrict them, and then argue about the process.  It’s created a huge customer service nightmare for them, and many of us have just made the decision to let our Amex cards go.

But in the latest move, American Express has offered to pay some card holders $300 to pay off, and close their accounts.  This is in stark contrast to what most banks do.  We’re not talking about people who are behind in payments.  Since American Express is a charge card that you pay off at the end of each month, it’s difficult to get too in over your head with the card.  But American Express is offer some card holders an incentive to pay up and get lost.

This is just the latest of what is some odd news about American Express policies.  American Express denied rumors that shopping in certain stores will get your credit line reduced, although many believe that is the case.  Some have had their credit lines reduced, or sometimes their card just flat out cancelled, while traveling.  This of course leaves them in a bad situation since “they didn’t leave home without their American Express card”.

I had my own American Express situation arise not too far back.  I was driving to the San Francisco airport to get on a flight to Hong Kong when I got a call from a rude Amex rep.  He started asking questions about my charges, and then stated that he wanted to see my tax returns for the past 3 years to see if I qualify for my credit line.   I told him that I was not interested sharing that, and if they had a problem with extending me credit, they shouldn’t have done it.  By the way, my bill was not late, or even due at this point.  They just decided that I was now a risk.  He gave me a deadline of 24 hours to fax my returns to him, even after I told him I was getting on a plane.

The end result is that when I went to check into my room in Hong Kong (well within the 24 hour period), sure enough the card was cancelled.  The also put a negative hit on my credit report.  So that will be the last time I have an Amex in my pocket.

It’s a shame that American Express has gone from being a high quality brand, damn near a status symbol, to being known by most as a pain in the ass card that is clearly in trouble.  American Express has never been popular with merchants, and hearing that a restaurant or store doesn’t accept American Express is not a rare thing, but it seems like it’s become more and more the case, making an American Express card a bit useless.  Adding the possibility that at any time your credit line may be decreased, or stopped all together, even when traveling, makes the card more of a liability than a benefit.  It could be argued that there is really no place for American Express anymore.  With Barcalys issuing the Black Card with Visa, and many other credit card having much more effective milage and points programs, an area where American Express has really dried up in lately, there is little to no reason have one in your wallet.  It’s unreliable, not widely accepted, offers little status, and no longer offers a good rewards program.  So what’s the point?