Mar 16

The economic crisis has only just begun.

Meredith Whitney, one of Wall Street’s best known and most bearish bank analysts, estimates that Americans’ credit card lines will be cut by $2.7 trillion, or 50 percent, by the end of 2010 — and fewer Americans will be offered new cards.

Related article: Meredith Whitney: Credit cards are the next credit crunch (Reuters)


* AmEx and Citi perform worse-than-expected – analysts

* JPMorgan and Capital One outperform expectations

* Default rates seen over 10 percent by year-end

NEW YORK, March 16 (Reuters) – U.S. credit card defaults rose in February to their highest level in at least 20 years, with losses particularly severe at American Express Co (AXP.N) and Citigroup (C.N) amid a deepening recession .

AmEx, the largest U.S. charge card operator by sales volume, said its net charge-off rate — debts companies believe they will never be able to collect — rose to 8.70 percent in February from 8.30 percent in January.

The credit card company’s shares wiped out early gains and ended down 3.3 percent as loan losses exceeded expectations. Moshe Orenbuch, an analyst at Credit Suisse, said American Express credit card losses were 10 basis points larger than forecast.

In addition, Citigroup Inc (C.N) — one of the largest issuers of MasterCard cards — disappointed analysts as its default rate soared to 9.33 percent in February, from 6.95 percent a month earlier, according to a report based on trusts representing a portion of securitized credit card debt.

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Feb 24

NEW YORK (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.

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