American Express reports more borrowing, less defaulted credit card debt

By Marvin Milner on Dec 8th, 2010

American Express recently announced its profits jumped 71 percent in the third quarter of the year as a result of a 14 percent rise in borrowing, according to a report from Dow Jones Newswires. In addition, the number of defaults it had to deal with continued to decline despite a sluggish economic recovery that has seen the housing market remain depressed, and the unemployment rate elevated.

"I think you'd have to be in outer space to not be concerned," AmEx CEO Kenneth Chenault said on a recent webcast, the news source reported. "That said, if I was just looking at us in a vacuum, I would feel very, very positive."

Unlike most major lenders, American Express makes money from increased borrowing because it both controls credit balances and processes transactions, the report said.

Most consumers have successfully cut back their credit card use in recent months, which has typically led to reduced profits for lenders.

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