Card Member Receivables and Loans

12 Months Ended

Dec. 31, 2016

Card Member Receivables and Loans [Abstract]

Note 2 – Card Member Receivables and Loans

American Express’ charge and credit card products result in the generation of Card Member receivables and Card Member loans, respectively. This Note is presented excluding amounts associated with the Card Member receivables HFS as of December 31, 2015; Credco did not have any Card Member receivables HFS as of December 31, 2016.

Card Member Receivables

Card Member receivables represent amounts due on American Express charge card products. For American Express, the Card Member receivables are recorded at the time a Card Member enters into a point-of-sale transaction with a merchant. Each charge card transaction is authorized based on its likely economics, a Card Member’s most recent credit information and spend patterns. Additionally, global spend limits are established to limit the maximum exposure for American Express. Charge Card Members generally must pay the full amount billed each month.

Credco records these Card Member receivables at the time they are purchased from TRS and certain of its subsidiaries that issue the card (card issuers). The net volume of Card Member receivables purchased during the years ended December 31, 2016, 2015 and 2014 was approximately $215 billion, $220 billion and $213 billion, respectively. Card Member receivable balances are presented on the Consolidated Balance Sheets, net of reserves for losses (refer to Note 3). Card Member receivables also include participation interests purchased from an affiliate. Participation interests in Card Member receivables represent undivided interests in the cash flows of the non-interest-earning Card Member receivables. In conjunction with TRS’ securitization program, Credco, through its wholly owned subsidiary, Credco Receivables Corporation (CRC), purchases participation interests from American Express Receivables Financing Corporation VIII LLC (RFC VIII), a wholly owned subsidiary of TRS that receives undivided, pro rata interests in Card Member receivables transferred to the American Express Issuance Trust (the Charge Trust), by TRS. The Charge Trust is a special purpose entity that is consolidated by TRS. As of December 31, 2016 and 2015, CRC owned approximately $4.0 billion and $4.1 billion, respectively, of participation interests in Card Member receivables purchased without recourse from RFC VIII.

Card Member receivables as of December 31, 2016 and 2015 consisted of:

(Millions)		2016		2015
U.S. Consumer Services	$	3,518	$	3,393
International Consumer and Network Services^(a)		1,526		1,484
Global Commercial Services^(b)		13,174		12,730
Card Member receivables^(c)		18,218		17,607
Less: Reserve for losses		110		114
Card Member receivables, net^(d)	$	18,108	$	17,493

Comprised of International consumer card business.
Comprised of Corporate and Small Business Services.
Net of deferred discount revenue totaling $27 million and $22 million as of December 31, 2016 and 2015, respectively.
Card Member receivables modified in a troubled debt restructuring (TDR) program were immaterial.

Card Member Loans

Card Member loans represent revolving amounts due on American Express cards. For American Express lending card products, these Card Member loans are recorded at the time a Card Member enters into a point-of-sale transaction with a merchant, as well as amounts due from charge Card Members who utilize the Pay Over Time features on their account and elect to revolve a portion of the outstanding balance by entering into a revolving payment arrangement with American Express. These loans have a range of terms such as credit limits, interest rates, fees and payment structures, which can be revised over time based on new information about Card Members and in accordance with applicable regulations and the respective product’s terms and conditions. Card Members holding revolving loans are typically required to make monthly payments based on pre-established amounts and the amounts that Card Members choose to revolve are subject to finance charges.

Credco records these Card Member loans at the time they are purchased from TRS and certain of its subsidiaries that issue the card (card issuers). The net volume of Card Member loans purchased was $4 billion during each of the years ended December 31, 2016, 2015 and 2014. Card Member loans are presented on the Consolidated Balance Sheets, net of reserves for losses (refer to Note 3), and include principal and any related accrued interest and fees. American Express’ policy generally is to cease accruing interest on a Card Member loan at the time the account is written off, and establish reserves for interest that will not be collected.

Card Member loans as of December 31, 2016 and 2015 consisted of:

(Millions)		2016		2015
International Consumer and Network Services^(a)	$	476	$	435
Less: Reserve for losses		5		4
Card Member loans, net^(b)	$	471	$	431

Comprised of International consumer card business.
Card Member loans modified in a TDR program were immaterial.

Card Member Receivables and Loans Aging

Generally, a Card Member account is considered past due if payment is not received within 30 days after the billing statement date. The following table presents the aging of Card Member receivables and Card Member loans as of December 31, 2016 and 2015:

					30-59		60-89
					Days		Days		90+ Days
2016(Millions)			Current		Past Due		Past Due		Past Due		Total
Card Member Receivables:
	U.S. Consumer Services	$	3,501	$	9	$	3	$	5	$	3,518
	International Consumer and Network Services		1,506		6		4		10		1,526
	Global Commercial Services
	Global Small Business Services		1,202		9		2		5		1,218
	Global Corporate Payments^(a)		(b)		(b)		(b)		108		11,956
Card Member Loans:
	International Consumer and Network Services	$	472	$	1	$	1	$	2	$	476

					30-59		60-89
					Days		Days		90+ Days
2015(Millions)			Current		Past Due		Past Due		Past Due		Total
Card Member Receivables:
	U.S. Consumer Services	$	3,371	$	9	$	4	$	9	$	3,393
	International Consumer and Network Services		1,462		8		4		10		1,484
	Global Commercial Services
	Global Small Business Services		1,380		5		3		6		1,394
	Global Corporate Payments^(a)		(b)		(b)		(b)		93		11,336
Card Member Loans:
	International Consumer and Network Services	$	432	$	1	$	1	$	1	$	435

For Global Corporate Payments Card Member receivables, delinquency data is tracked based on days past billing status rather than days past due. A Card Member account is considered 90 days past billing if payment has not been received within 90 days of the Card Member’s billing statement date. In addition, if collection procedures are initiated on an account prior to the account becoming 90 days past billing, the associated Card Member receivable balance is classified as 90 days past billing. These amounts are shown above as 90+ Days Past Due for presentation purposes.
Delinquency data for periods other than 90 days past billing is not available due to system constraints. Therefore, such data has not been utilized for risk management purposes. The balances that are current to 89 days past due can be derived as the difference between the Total and the 90+ Days Past Due balances.

Credit Quality Indicators for Card Member Receivables and Loans

The following tables present the key credit quality indicators as of or for the years ended December 31:

		2016				2015
				30+ Days				30+ Days
		Net		Past Due		Net		Past Due
		Write-off		as a % of		Write-off		as a % of
		Rate	^(a)	Total		Rate	^(a)	Total
Card Member Receivables:
	U.S. Consumer Services	0.54	%	0.48	%	0.78	%	0.65	%
	International Consumer and Network Services	1.86	%	1.31	%	1.75	%	1.48	%
	Global Small Business Services	1.03	%	1.31	%	1.10	%	1.00	%
Card Member Loans:
	International Consumer and Network Services	1.15	%	0.84	%	1.02	%	0.69	%

		2016				2015
		Net Loss		90+ Days		Net Loss		90+ Days
		Ratio as a		Past		Ratio as a		Past
		% of		Billing		% of		Billing
		Charge		as a % of		Charge		as a % of
		Volume	^(b)	Receivables		Volume	^(b)	Receivables
Card Member Receivables:
	Global Corporate Payments	0.06	%	0.90	%	0.07	%	0.82	%

Represents the amount of Card Member receivables or Card Member loans owned by Credco that are written off, net of recoveries, expressed as a percentage of the average Card Member receivables or Card Member loans balances in each of the periods indicated.
Represents the amount of Card Member receivables owned by Credco that are written off, net of recoveries, expressed as a percentage of the volume of Card Member receivables purchased by Credco in each of the periods indicated.

Refer to Note 3 for additional indicators, including external environmental qualitative factors, management considers in its monthly evaluation process for reserves for losses.