Why does AmEx want me to keep my account open?

Last Xmas I signed up for an American Express card that racks up FF miles with Delta Airlines. Amex waived the annual fee for the first year, and in addition to the standard 1 mile per dollar spent, they offered 25,000 FF miles for the first $1000 of spending, and another 25,000 miles if I spent $10K within six months. Both goals were easily accomplished, giving me 60,000 FF miles in a short time.

OK, great, so last month I took out a second card on mywife’s Amex account so I could start dumping miles on her (she got an Amex card last Xmas too, but with fewer promotional miles). Yesterday I went to cancel my own AmEx card, since I wouldn’t be using it anymore and didn’t want to pay the upcoming annual fee. I explained to the agent that I had a second card on my wife’s account (meaning Amex would have my business), but he still was insistent that I keep my own account open, and he gave me an additional 12,500 miles to do so, with no spending target, no strings attached. Assuming 2.5 cents of value per FF mile, that’s a $312 perk, not bad at all. I have until December before they charge an annual fee, so I guess I’ll just be cancelling it later.

Questions: Knowing that they will still have my business (through my wife’s account) even if I cancel my own credit card account, why would Amex want me to keep my own credit card account open? Presumably AmEx is buying these miles from Delta. How much would Amex be paying to Delta for those miles? IOW, how much did this perk really cost AmEx?

Maybe they like to boast in advertising of how many people have their cards? Maybe someone at AmEx has a quota that your cancellation would hurt?

They like getting the annual fee for your card?

That seems like thee obvious answer. Beyond that, the more cards there are in circulation the more money people are likely to spend. If your life maxes out her card, you can spend money on yours (as opposed to moving over to a Visa or MC).

I suppose the annual fee is one possible answer, but the agent didn’t obligate me to carry the card through the next fee charge. I could call next week and cancel it. They haven’t guaranteed receipt of an annual fee from me, though I suppose they’ve upped their odds a little bit (if I happened to be a procrastinator).

However, even if they were somehow guaranteed an annual fee from me this coming December, they paid for it dearly. The annual fee is only $95. How much did the gift of 12,500 FF miles cost them?

I can’t imagine maxing out my wife’s card, even with both of us spending on it. Wow.

No real idea but one thought may be the way the agents are incentivised. They may get a bonus for any leaving customer they talk into staying (and be allowed to offer miles as an inducement) but the system is not interested in whether or not you would otherwise be using your wife’s card.

ETA Should have added that if you easily spent $10k in six months the system will be showing you as a customer they want to retain.

They probably also want you to have the account open so you might use it. They get a pretty good cut from merchants, more so than Visa/MC/Discover IIRC.

Have you seen the retraining program when someone cancels? there was a 30 second documentary on it - I think Peggy was the agent that was going to be retrained <shudder>.

(You can’t use the card if you close the card - they want you to use it)

Maybe you won’t, but they probably have statistics handy showing that X% of people in your situation will keep using both cards for larger amounts than couples with only one card.

Well, for me it was because there was some weird fee I didn’t know about for not using the card.

It could also be that it is one division’s interest to keep as many cards in circulation as possible, even if it is not in the corporate interest of AMEX. I wonder why our local dept store tries so hard to get you to have their card. It must cost them money to keep their CC division open, possibly more than the MC and Visa fees they pay. But it is certainly in the interest of the CC division to keep operating and I suspect that they are the ones that decided to offer the bonus (10% off on any purchase today) to get a card. Everyone has his own agenda.

Amex gets about 2.56% of your spend as income. So that $10,000 got them $256. If they can get that and an annual fee from you, that’s pretty good. They most likely get their miles at a deep discount. They know you may still leave, but they’re hoping you won’t.

OK but what about the 30% interest they charge on carrying a balance? Not everybody pays their bill off every month.