Add US$75 million paintings to the list of extravagant things American Express (AmEx) users can charge to their cards. 

The charge-card giant is able to approve such transactions because it underwrites every purchase, meaning AmEx evaluates a customer’s riskiness each time they use their card, according to chief executive Steve Squeri. Most credit cards have a pre-defined limit. 

“From a credit perspective, that’s a really reassuring thing,” Squeri said on a call with analysts on Friday (Jan 27). It’s also why stories sometimes circulate in which someone charges a painting for US$75 million, he said. “There’s nobody that has a US$75 million line. Those are very difficult underwriting decisions, and not for the faint of heart.”

That said, AmEx has begun to tighten underwriting standards for its new accounts as it prepares for a weaker economy, according to Squeri. The company has seen charge-offs more than double in the last year, though losses still remain well below pre-pandemic levels. 

For AmEx credit-card holders that do have a limit, the company is constantly pruning that so-called “contingent liability” to try to keep a lid on future losses, Squeri said. 

“If we have somebody that has X for a line and they’re only using 25 per cent of X, we may not keep X there that long because we don’t want to be a lender of last resort,” Squeri said. “We’re not letting somebody run up to a limit and have that write-off.” 

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AmEx has long cultivated a mystique around its premium cards, especially the US$5,000-a-year Centurion card. Singer-songwriter Noel Gallagher once boasted that he could buy a Boeing 747 with his Black card. 

The company’s stock soared the most in more than two years on Friday after executives forecast revenue and profits would rise this year more than analysts estimated. It advanced 11 per cent to US$172.95 at 11.19 am in New York. That made it the best performer in the 30-company Dow Jones Industrial Average. BLOOMBERG