Thursday, February 12, 2015

Costco and Amex to break up ??

Hello everyone, hope all of you are looking forward to the weekend. We had team lunch and  a party at work, that makes me think today is Friday. I just finished writing the valentine's day cards for my kids classes. Though it is tiring , I always like to write these cards.

I was looking for a good deal for car wash and detail and found this one Genie car wash $39 for $80 worth of car wash and $119 for $258 worth of interior and exterior detailing. This is a good deal as the basic car wash is $14.99 and you can use it multiple times. I see more than 450 people have bought so it has to be a good one.

Most of us who shop at Costco have an Amex card , since Costco only accepts Amex cards or you have to use your debit card. Sometimes I thought it was just ridiculous, they make people get an Amex card even if you don't want one. Also many times we see people from Amex standing there and asking if we wanted to apply for an Amex card. I have always wondered how Amex managed to pull this contract with Costco, and thought "what a smart move by them".

Now after 13 years, their contract is ending as of March 31st 2016 and looks like  is not going to be a renewed after that. Amex CEO announced that "We are not able to reach terms that would make economic sense for our company and share holders". Amex shares are already down by 7%. Amex also announced that this would affect the revenue of the company for next 2 years and growth will be flat during 2015 as they prepare for this contract termination.

In Canada,Capital One and Master Card are card partners for Costco. It is expected that they will replace Amex in United States . On this speculation the share prices of Capital One has increased by 2%. Both Costco and Capital One has not made any announcements yet.

Hope Amex gets out of this. I remember my husband's uncle once mentioning that it , in early 80's it was very difficult to get approved for an Amex card . These days card approvals are sent to our doorstep and there are so many card companies that fight for a piece of the meat. That is also one of the reason for such break ups. Please share your thoughts.
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