American Express Offers $300...for Customers to Close Accounts

This piece of news caught my eye...how often do you hear about a company offering $300 to NOT be a customer?

Yep, like so many credit card companies these days, American Express has realized that it needs to scale back the amount of credit it's pumping out into the world. The company is offering "select card holders" a $300 pre-paid AMEX card if they pay down their remaining debt and close their accounts by April.

AMEX won't say how it chose who to send the offer to, or how many offer letters were sent out. We do know that the marketing masterminds behind this initiative are presenting it as a unique opportunity for you to "simplify your finances," rather than as a way for them to get you and your potentially risky credit behavior off their books.

I know it's tempting, but...

If you received this offer, consider the price you'll really be paying for that $300 pre-paid card. Closing your AMEX account will reduce the overall amount of credit that is currently available to you. Less available credit means that you might be in a jam if you have unforeseen medical and car repair costs in one month, for example. Without your AMEX line of credit, you'll have an overall higher "debt-to-credit ratio," which can be a major drag on your credit score. And we all know that lower credit scores mean higher interest payments on any new credit cards or loans you apply for in the future.

So while $300 sounds pretty good, remember that you'll be shutting down some of your available credit (which you may need on a rainy day), and that less credit could mean a lower credit score.