Cardmember Receivables and Loans

9 Months Ended

Sep. 30, 2012

Cardmember Receivables and Loans [Abstract]

Cardmember Receivables and Loans

Cardmember Receivables and Loans

As described below, American Express' charge and lending payment card products result in the generation of cardmember receivables and cardmember loans, respectively.

Cardmember Receivables

Cardmember receivables represent amounts due from customers of American Express and certain of its affiliates' charge payment card products. For American Express, the cardmember receivables are recorded at the time a cardmember enters into a point-of-sale transaction with a merchant. Each charge card transaction is authorized based on its likely economics reflecting a cardmember's most recent credit information and spend patterns. Additionally, global spend limits are established to limit the maximum exposure for American Express.

Charge card customers generally must pay the full amount billed each month.

Credco records these cardmember receivables at the time they are purchased from TRS and certain of its subsidiaries that issue the card (card issuers). The total volume of cardmemberreceivables purchased during the nine months endedSeptember 30, 2012 and 2011 wasapproximately $149 billion and $130 billion, respectively.Cardmember receivable balances are presented on the Consolidated Balance Sheets, net of reserves for losses (refer to Note 4). Cardmember receivables also include participation interests purchased from an affiliate. Participation interests in cardmember receivables represent undivided interests in the cash flows of the non-interest-earningcardmemberreceivables. In conjunction with TRS' securitization program, Credco, through its whollyowned subsidiary, Credco Receivables Corporation (CRC), purchases participation interests from American Express Receivables Financing Corporation V LLC (RFC V), a whollyowned subsidiary of TRS that receives an undivided, pro rata interest incardmember receivables transferred to the American Express Issuance Trust (AEIT) by TRS. AEIT is a special purpose entity that is consolidated by TRS. As of September 30,2012and December 31, 2011, CRC owned approximately $7 billion and $3billion, respectively, of participation interests in cardmember receivables purchased without recoursefrom RFCV.

Cardmember receivables as ofSeptember 30, 2012and December 31, 2011 consisted of:

(Millions)			2012		2011
U.S. Consumer and Small Business Services		$	6,516	$	2,843
International and Global Commercial Services(a)			10,870		9,964
Cardmember receivables			17,386		12,807
Less: Reserve for losses			99		71
	Cardmember receivables, net(b)	$	17,287	$	12,736

• International is comprised of consumer and small business services.
• Cardmember receivables modified in a troubled debt restructuring (TDR) program were immaterial.

Cardmember Loans

Cardmember loans represent amounts due from customers of American Express and certain of its affiliates' lending payment card products. For American Express, these cardmember loansare recorded at the time a cardmember enters into a point-of-sale transaction with a merchant or when a charge card customer enters into an extended payment arrangement with American Express. American Express' lending portfolios primarily include revolving loans to cardmembers obtained through either their credit card accounts or the lending-on-charge feature of their charge card accounts. 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 cardmembers and in accordance with applicable regulations and the respective product's terms and conditions. Cardmembers holding revolving loans are typically required to make monthly payments based on pre-established amounts. The amounts that cardmembers choose to revolve are subject to finance charges.

Credco records these cardmember loans at the time they are purchased from TRS and certain of its affiliates. The total volume of cardmember loans purchased during the nine months endedSeptember 30, 2012 and 2011was $2.5 billion and $2.0 billion, respectively.Cardmember loans are presented on the Consolidated Balance Sheets, net of reserves for losses (refer to Note 4), and include principal, accrued interest and fees receivable. Credco's policy generally is to cease accruing interest on a cardmember loan at the time the account is written off, and establish reserves for interest that Credco believes will not be collected.

Cardmember loansas ofSeptember 30, 2012 and December 31, 2011were as follows:

(Millions)			2012		2011
International Card Services		$	424	$	411
Less: Reserve for losses			4		5
	Cardmember loans, net(a)	$	420	$	406

• Cardmember loans modified in a troubled debt restructuring (TDR) program were immaterial.

CardmemberReceivables and CardmemberLoans Aging

Generally, a cardmember account is considered past due if payment is not received within 30 days after the billing statement date. The following table represents the aging of cardmember receivables andcardmember loansas of September 30,2012 and December 31, 2011:

					30-59		60-89
					Days		Days		90+ Days
2012(Millions)			Current		Past Due		Past Due		Past Due		Total
Cardmember Receivables:
	U.S. Consumer and Small Business Services	$	6,435	$	35	$	16	$	30	$	6,516
	International and Global Commercial Services(a)		(b)		(b)		(b)	$	77	$	10,870
Cardmember Loans:
	International Card Services(c)	$	417	$	3	$	1	$	3	$	424
					30-59		60-89
					Days		Days		90+ Days
2011(Millions)			Current		Past Due		Past Due		Past Due		Total
Cardmember Receivables:
	U.S. Consumer and Small Business Services	$	2,804	$	14	$	8	$	17	$	2,843
	International and Global Commercial Services(a)		(b)		(b)		(b)	$	82	$	9,964
Cardmember Loans:
	International Card Services(c)	$	404	$	3	$	1	$	3	$	411

• For cardmember receivables in International and Global Commercial Services, delinquency data is tracked based on days past billing status rather than days past due. A cardmember account is considered 90 days past billing if payment has not been received within 90 days of the cardmember's billing statement date. In addition, ifcollection procedures are initiated on an account prior to the account becoming 90 days past billing, the associated cardmember receivable balance is considered 90 days past billing. These amounts are shown above as 90+Days Past Due for presentation purposes.
• Historically, data for periods prior to 90 days past billing are not available due to financial reporting system constraints. Therefore, it has not been relied upon 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.
• Cardmember loans over 90 days past due continue to accrue interest.

Credit Quality Indicators forCardmember Receivables andCardmemberLoans

The following tables present the key credit quality indicators as of or for the nine months endedSeptember 30:

		2012				2011
				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
Cardmember Receivables:
	U.S. Consumer and Small Business Services	1.34	%	1.24	%	1.36	%	1.70	%
Cardmember Loans:
	International Card Services	0.63	%	1.65	%	0.57	%	1.95	%
		2012				2011
		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
Cardmember Receivables:
	International and Global Commercial Services	0.07	%	0.71	%	0.04	%	0.74	%

• Credco's write-offs, net of recoveries, represent the amount of cardmember receivables or cardmember loans owned by Credco that are written off, expressed as a percentage of the average cardmember receivables or cardmember loans balances during the period.
• Credco's write-offs, net of recoveries, represent the amount of cardmember receivables owned by Credco that are written off, expressed as a percentage of the volume of cardmember receivables purchased by Credco during the period.

Refer to Note 4 for additional indicators, including external environmental factors, that management considers in its monthly evaluation process for reserves for losses.