Friday, June 27, 2008

AMEX Is Hurting

"Business conditions continue to weaken in the U.S.,” said American Express CEO Ken Chenault yesterday, “and so far this month, we have seen credit indicators deteriorate beyond our expectations.”
On top of a recent $1.8 billion settlement with MasterCard, Amex is facing some stiff head winds. Unlike MasterCard and Visa, American Express actually issues credit to its customers, instead of just processing transactions on behalf of banks. The credit card company predicted the monthly write-off rate for bad credit would peak at 5.3% this year… a level already attained back in March.
We’ll keep an eye on Amex’s earnings report next month… likely another “canary in the coal mine.”

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