Card Member Receivables and Loans

9 Months Ended

Sep. 30, 2013

Card Member Receivables and Loans [Abstract]

Card Member Receivables and Loans

3. Card Member Receivables and Loans

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

Card Member Receivables

Card Member receivables represent amounts due from customers of American Express and certainAmerican Express joint venturechargecard 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 reflecting 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 customers 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 and American Express joint ventures that issue the card (card issuers). The total volume of Card Memberreceivables purchased during the nine months endedSeptember 30, 2013 and 2012 wasapproximately $161billion and $149 billion, respectively.Card Member receivable balances are presented on the Consolidated Balance Sheets, net of reserves for losses (refer to Note 4). 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-earningCard Memberreceivables. In conjunction with TRS' securitization program, Credco, through its whollyowned subsidiary, Credco Receivables Corporation (CRC), purchases participation interests fromAmerican Express Receivables Financing Corporation VIII LLC (RFC VIII),a whollyowned subsidiary of TRS that receivesundivided, pro rata interests inCard Member receivables transferred to the American Express Issuance Trust II (the Charge Trust II)During the third quarter of 2013, TRS transferred Card Member receivables from the American Express Issuance Trust (the Charge Trust) to the Charge Trust II, collectively referred to as the Charge Trusts. As of September 30, 2013,the Charge Trust was dissolved, and TRSwill utilize the Charge Trust II for securitization of Card Member receivables.2RFC V is a wholly owned subsidiary of TRS that received undivided, pro rata interests in Card Member receivables transferred to the Charge Trust prior to its dissolution. As a result of dissolution of the Charge Trust, CRC's Card Member receivables balance as of September 30, 2013 represents purchases of the participation interests from RFC VIII only., by TRS.The Charge Trust II is a special purpose entity that is consolidated by TRS. As of September 30,2013and December 31, 2012, CRC owned approximately niland $1.7billion, respectively, of participation interests in Card Member receivables purchased without recoursefrom American Express Receivables Financing Corporation V LLC (RFCV)2. As of September 30, 2013 and December 31, 2012, CRC owned approximately $5 billion and $2.9 billion, respectively, of participation interests in Card Member receivables purchased without recourse from RFC VIII.

Card Member receivables as ofSeptember 30, 2013and December 31, 2012consisted of:

(Millions)			2013		2012
U.S. Consumer and Small Business Services		$	4,987	$	4,464
International and Global Commercial Services(a)			12,018		10,898
Card Member receivables			17,005		15,362
Less: Reserve for losses			85		83
	Card Member receivables, net(b)	$	16,920	$	15,279

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

Card Member Loans

Card Member loans represent amounts due from customers of American Express and certain American Express joint venturelending card products. For American Express, these Card Member loansare 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 product customers when a Card Member enters into an extended payment arrangement with American Express. American Express' lending portfolios primarily include revolving loans to Card Members obtained through either their credit card accounts or the lendingoncharge 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 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. 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 subsidiaries and certain American Express joint ventures. The total volume of Card Memberloans purchased during the nine months endedSeptember 30, 2013 and 2012was $2.9 billion and $2.5 billion, respectively.Card Member 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 Card Member loan at the time the account is written off, and establish reserves for interest that Credco believes will not be collected.

Card Member loansas ofSeptember 30, 2013 and December 31, 2012consisted of:

(Millions)			2013		2012
International Card Services		$	469	$	462
Less: Reserve for losses			5		5
	Card Member loans, net(a)	$	464	$	457

• 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 represents the aging of Card Member receivables andloansas of September 30,2013 and December 31, 2012:

					30-59		60-89
					Days		Days		90+ Days
2013 (Millions)			Current		Past Due		Past Due		Past Due		Total
Card Member Receivables:
	U.S. Consumer and Small Business Services	$	4,932	$	27	$	9	$	19	$	4,987
	International and Global Commercial Services(a)		(b)		(b)		(b)	$	100	$	12,018
Card Member Loans:
	International Card Services(c)	$	461	$	3	$	2	$	3	$	469
					30-59		60-89
					Days		Days		90+ Days
2012 (Millions)			Current		Past Due		Past Due		Past Due		Total
Card Member Receivables:
	U.S. Consumer and Small Business Services	$	4,420	$	15	$	9	$	20	$	4,464
	International and Global Commercial Services(a)		(b)		(b)		(b)	$	90	$	10,898
Card Member Loans:
	International Card Services(c)	$	454	$	3	$	2	$	3	$	462

• For Card Member receivables in International and Global Commercial Services, 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, ifCredco initiates collection procedureson an account prior to the account becoming 90 days past billing, the associated Card Member receivable balance is considered 90 days past billing. These amounts are shown above as 90+Days Past Due for presentation purposes.
• 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.
• Card Member loans over 90 days past due continue to accrue interest.

Credit Quality Indicators forCard Member Receivables andLoans

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

		2013				2012
				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 and Small Business Services	1.08	%	1.10	%	1.34	%	1.24	%
Card Member Loans:
	International Card Services	0.86	%	1.71	%	0.63	%	1.65	%
		2013				2012
		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:
	International and Global Commercial Services	0.06	%	0.83	%	0.07	%	0.71	%

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

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