American Express New Game Plan

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American Express Company (AmEx) has decided to end its partnerships with Costco Wholesale Corp. and Jet Blue Airways Corp.  The terms of the partnership with Costco were changed in ways that increased the risk with little return.  Walking away makes sense to some for AmEx because credit card loans are the riskiest form of loans that can easily turn into losses if the economy slips into a bad recession.  Costco had a 15-year partnership with American Express, but will end up signing contracts with Visa and Citigroup.  Costco accounted for 10% of AmEx’s cards and about $80 billion of spending in 2014.  American Express had been known as the card to have for the wealthy and well-traveled, but the allure of the card is dwindling because competition is intense.  Citigroup in particular is known to hire experienced executives away from American Express.  American Express will have to overcome many challenges…

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