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American Express Debt Consolidation

American Express is My Largest Creditor. What Debt Consolidation Options are Available to Help Me with AmEx and My Other Creditors?

I've had American Express accounts for many years. Never had a problem with them but my wife lost her job this year and we are soon not going to be able to make all of our payments. Right now, our credit score is good, even though we have about $35,000 in total credit card debt. What options can you suggest to us for consolidating our AmEx and other credit card debt?

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American Express Debt Consolidation | American Express card
Highlights

  • Speak with American Express about a hardship program, before you miss a payment.
  • American Express doesn't offer debt consolidation loans. Check rates below.
  • American Express aggressively collects on delinquent debts.

Thank you for your question about your overall debt and your specific concerns about your American Express debt consolidation options. American Express is a major credit issuer, with over 100 million AmEx cards issued. American Express issues cards for personal and business use. In addition to issuing credit cards themselves, other banks issue cards with the AmEx brand. For example, Wells Fargo offers an American Express card.  A smart first step is to determine whether American Express issued your card or another bank, as that can affect the solution you put in place and how the creditor will treat you.

There are different ways you can work to get out of the sizable debt you've built up. Some steps you should take on your own. At times, debt problems may be so severe that they require professional assistance to get the best results.

Self-Help

Contact Your Creditors

You stated that you may not be able to make your required payments, due to the loss of your wife's income. You didn't say whether you have an American Express credit card or charge card. The difference is that you can make a minimum payment and carry a running balance on the credit card and you are required to pay the balance in full each month on the charge card.

In either case, If you are going to be unable to make the monthly minimum payment, contact American Express (or the bank that issued your AmEX card) in advance, before you miss a payment. This does not guarantee that they will waive a late fee, decide not hike your interest rate, or be flexible with you, but maintaining open communication is a smart choice. Ask if a financial hardship program is available, Make it clear that you can prove that the hardship is due to a job loss. Hardship programs offer temporary relief, but that can be the difference that allows you to bridge a gap. Ask for an interest rate reduction or permission to make a smaller than normal minimum payment.

Speak With a Certified Debt Consultant, Now

To see if a professional debt relief firm can save you money and is the right solution for your situation, contact one of Bills.com's pre-screened debt providers for a free, no-hassle debt relief quote.

Balance Transfers

You said your credit score is in good standing. That means a balance transfer is one possible debt consolidation solution. Balance transfer rates can be as low as 0%, but they low interest period is only temporary. Make sure you understand the fees that come with the balance transfer and how long the low introductory rate lasts. Given the drop in household income, you don't want to do a balance transfer and pay the 3% fee that most offers charge, if you are not confident that you will make the monthly payment each month. 

American Express Debt Consolidation Loan Options

American Express does not offer unsecured personal loans. If you have strong credit, you may be able to find a debt consolidation loan from another provider, such as a bank, credit union, or a peer-to-peer lender

Unsecured personal loans have a higher monthly payment than the monthly minimum required credit card payment. However, if your AmEX card is a charge card, requiring you to pay the full balance each month, a personal loan with a 3-5 year repayment term could provide an affordable monthly payment.

Shop For a Debt Consolidation Loan

Bills.com makes it easy to shop for a debt consolidation loan. Start by filling in your credit score, zip code, loan purpose, and the amount of loan you need. Check out different offers and click on the appropriate ones

Outside Help

If American Express or your other creditors are not willing to work with you, your best debt relief solution may be to work with a professional debt relief organization. Look into both credit counseling and debt settlement. Before you choose the right way to solve your debt problem, it can be very important to understand how your specific creditors work with their customers. That way, you can plan the most effective strategy for getting out of debt.

Bills.com's editorial staff has done extensive research to provide you with some specific facts about American Express and how it deals with accounts enrolled in debt relief programs.

American Express Credit Cards & Credit Counseling

If you enroll a American Express account in a credit counseling's debt management program, you should expect:

  • A monthly payment that is 2.1% of your balance for payment
  • A minimum monthly payment of $15
  • An interest rate of 9.99%. If your current rate is below 9.99%, not only is there is no reduction, but your rate will be increased to the 9.99% in the DMP. If you have a card with an interest rate below the one the DMP will put in place, you can try keeping the card out of the program, but most DMPs require you to place all of your cards into their program.
  • For the American Express Bank of America Accelerated Rewards Card, expect to pay 2.25% of your balance for  your DMP payment and 12% interest.

American Express & Debt Settlement

Consider debt settlement to resolve your debt, if you are in a serious financial hardship. Debt settlement is an aggressive form of debt relief that's designed to get you out of debt in 24-48 months. For a debt settlement program to succeed, you need to make a monthly program payment, which is usually significantly smaller than your required minimum monthly payments.

Bills.com reviewed hundreds of settlements reached by professional debt settlement negotiators for the client's American Express accounts. The average settlement negotiated was less than 52% of the balance that the clients enrolled in the settlement program for all accounts still in the hands of AmEx. Account sent to legal collections settled at a higher percentage.

You are free to negotiate directly with your creditors, if you feel you can do so successfully. However if you are not confident that you have the skills, nerve, and time to handle back and forth negotiations with debt collectors, consider hiring a reputable and experienced settlement company. Make sure that you only work with a debt settlement firm that  charges no up-front fees. Bills.com recommends choosing a debt settlement firm that is a member of the AFCC (American Fair Credit Council) and has debt consultants that are accredited by the IAPDA (International Association of Professional Debt Arbitrators). As with any debt relief solution you consider, you should weigh the pros and cons of debt settlement before deciding.

Collections Process

If you default on any of your American Express accounts, or with any of your other creditors, and you are unable to work out a solution with them, you will end up in collections. How your account is handled depends on the creditor. Different creditors don't treat delinquent accounts the same. Even an individual creditor may treat its own customers differently, being aggressive with some and more lenient with others. However, there are some basic strategies and practices that American Express and other creditors use when collecting on delinquent accounts.

General Collections Practices

  • Most creditors first attempt to collect a debt internally. If they aren't successful, they refer the account to an outside collection agency or a law office for collections.
  • Some creditors have in-house legal departments to collect on the debt, though that is becoming less common.
  • In general, accounts are referred for legal collections after they are somewhere between six and nine months delinquent, depending on the creditor.
  • Your recent activity on your account can have a huge affect the collection process.  For instance, large purchases made shortly before a customer defaults, may cause a creditor to pursue collections more aggressively.
  • Eventually, your account may be sold to a debt collector. Creditors that are unable to collect anything after your debt has been contracted to a law office usually sell the debt to a debt purchasing collection agency. This frequently happens approximately 18 to 24 months into the collection process.
In Collections? Know Your State Laws.

The state you live in, the assets you own, and state-specific collection laws affect how aggressively a creditor comes after you. Creditors are less likely to engage in legal collections, for example, in states that don't allow for wage garnishment, such as Texas, Pennsylvania, and South Carolina.

American Express's Collection Process and Legal Action

Here are some facts about how American Express handle collections accounts, based on Bills.com research:

  1. American Express is a very aggressive creditor, when it comes to collecting on delinquent accounts.
  2. They begin to offer settlements when the account is in pre charge off status. Usually about 3 to 4 months after the last payment was made.
  3. Accounts in the Recovery Department, the last stop before an account gets sent to legal collections, may be willing to settle in full for 50%, after the account charges-off.
  4. Most settlements need to be paid off in full within a 90-day cycle, though settlements on very large balances may be given more time.
  5. An account goes to legal collections based on the customer's credit report and assets. Large balances are likelier to end up in legal collections.
  6. They pay close attention to recent charges made prior to any default. If you made large purchases in the six months before you defaulted, it is far likelier that your account will be sent to legal collections.
Bills Action Plan
  • Keep in touch with your creditors. Let them know if you're going to miss a payment.
  • Open every letter you get from a creditor. Ignoring a problem will not make it go away. If you are ever sued by a creditor, respond and appear in court, if summonsed.
  • Review each one of your debt relief options, before you decide which one is best for you.
  • Check out the Bills.com's, free Debt Navigator tool. The Debt Navigator helps you compare your available debt options, based on the goals and priorities that you specify. It provides you a realistic estimate of how long each options takes to get out of debt and your total costs.
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