What does Amex consider bad debt?

Amex’s Definition of Bad Debt

American Express (Amex) defines bad debt as any debt that is unlikely to be repaid. This includes debt that is past due, in default, or has been charged off by the creditor. Amex may also consider debt to be bad if the borrower has a poor credit history or is in financial distress.

Types of Bad Debt

There are two main types of bad debt:

• Unsecured debt: This type of debt is not backed by any collateral, such as a car or a house. If the borrower defaults on the loan, the creditor has no recourse but to write off the debt.
• Secured debt: This type of debt is backed by collateral, such as a car or a house. If the borrower defaults on the loan, the creditor can seize the collateral and sell it to recoup the losses.

Consequences of Bad Debt

Having bad debt can have a number of negative consequences, including:

• Damaged credit: Bad debt can damage your credit score, making it more difficult to qualify for loans and other forms of credit in the future.
• Increased interest rates: If you have bad debt, you may be charged higher interest rates on new loans.
• Difficulty getting a job: Some employers may run credit checks on job applicants, and bad debt can make you less likely to be hired.

How to Avoid Bad Debt

There are a number of things you can do to avoid bad debt, including:

• Budget carefully: Make sure you have a budget that you can stick to, and avoid spending more than you earn.
• Pay your bills on time: Paying your bills on time will help you avoid late fees and damage to your credit score.
• Avoid high-interest debt: If you do need to borrow money, avoid high-interest debt, such as payday loans and credit card debt.
• Get help if you need it: If you are struggling to manage your debt, there are a number of resources available to help you, such as credit counseling and debt management plans.

Conclusion

Bad debt can have a number of negative consequences, so it is important to avoid it if possible. By following the tips above, you can help reduce your risk of getting into bad debt.