Amex to Allow Plastic Mortgage Payments; Citi Moves Customers from Visa to Amex

American Express announced Wednesday it is initiating the first program that allows cardholders to pay monthly mortgage payments with their credit cards -- and earn rewards doing so. In the past the idea has been shunned by lenders, who were unwilling to pay credit card companies to process the transactions. Amex said American Home Mortgage Investment and IndyMac Bancorp -- both top-10 residential lenders -- were the first two to sign on with the program. Enrolling carries a one-time $395 fee. Assuming a $2,500 monthly payment, a Blue Cash cardholder would recoup $385 in cash rewards during the first year. Customers who don't pay off their bills monthly will be hit by an additional 15-18% interest charge. Spokesman Bill Glenn said the company expected more lenders to join the program. Separately, Wall Street Journal reports Citigroup is moving thousands of Visa/AAdvantage [American Airlines] cardholders to Amex cards. "Through a careful analysis of our customer portfolio, Citi Cards has identified a select group of Citi/AAdvantage cardmembers who may benefit from a conversion to the Citi/AAdvantage American Express card, with additional features and benefits and the opportunity to earn additional miles," Citigroup said. Letters were mailed to affected cardholders, who have the right to opt-out of the switch by calling the bank. The change is part of what the Journal calls Citigroup's effort to "pump up its relationship with American Express." Amex shares are up 5.5% YTD and 22.5% over the past year.

Sources: Press release, Wall Street Journal I, II
Commentary: Navigating New Card Rewards [WSJ] • American Express: Watch the Dividend • Buying MasterCard Pre-Earnings: The Precedent of Capital One and AmEx
Stocks/ETFs to watch: American Express Company (AXP), Citigroup Inc. (C), IndyMac Bancorp Inc. (NDE), American Home Mortgage Investment Corp (AHM), AMR Corp. (AMR). Competitors: MasterCard Inc. (MA), Capital One Financial Corp. (COF)

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