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Thursday, November 13, 2008

Bailout?

How can this be?

American Express shares plunge on bailout report: Financial News - Yahoo! Finance:
"AmEx received approval earlier this week from the Federal Reserve to become a bank holding company, which is a similar structure to traditional commercial banks. The credit card company now has access to financing from the Fed and the ability to grow a large deposit base."
My father has an AmEx card, its his 'go to' card for any credit purchase he has to make - so he rarely uses it, he hates credit cards as a rule, but has to accept them for his business (AmEx, Visa, Mastercard only ... Novus/Discover costs the business too much) ...

Anyways, the reason he likes it is because when the bill comes in, he has to pay off the entire bill ... they don't have the carry over every month like other companies have.

so this being the case -- how can they be having an issue? yes they foward the $ on the promise that people will be paying them back right away ... yes if people are using their card and not paying back it would mean they are in trouble ... but then the way most other cards work is that they survive on their late fees/interest charges ... if people pay you off every month you don't get those things so you don't gain.

Seems to me ... that instead of getting monies from the gov ... all they need to do is change the way they conduct their business. start letting people carry a balance ... charge 22% usery fee ... kick up those late fees ..........

oh wait. that's why people don't like credit cards ... they keep raising their fees.

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