American Express Co. (AXP:13.62, +1.47, +12.1%) is offering a $300 incentive for customers to cancel their accounts as the card issuer grapples with surging loan delinquencies and soft card-member spending.
The company is offering a $300 prepaid card, which can be used anywhere American Express is accepted, to certain customers who pay off their entire balance between March 1 and the end of April. Enrolling in the deal automatically cancels the customer’s account, regardless of whether he successfully pays off the balance.
The move comes as ratings firm have warned that rising credit-card delinquencies could push the charge-off rate into the double digits by the end of the year from December’s record level of 7.7% amid rising unemployment rates. The offer is also a stark contrast to previous incentives, like frequent flyer miles and cash-back deals, offered by card issuers to encourage consumers to open an account.
American Express’ offer is only valid for customers who receive a mailing with a registration code from the company and was advertised as a way for people to “simplify your finances.” It wasn’t immediately clear what kind of balances the company is targeting with the deal or how many people will receive the offer.
The company also warned consumers may lose rewards points by enrolling in the offer.
Shares of American Express were recently down 3.9% at $12.47 amid another broad decline for equities. The stock is down 70% since September.