UNITED
STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-Q

x QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly
period ended June 30, 2006

OR

o TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the transition
period from ____ to ____

Commission File
No. 1-6908

AMERICAN EXPRESS CREDIT CORPORATION(Exact name of
registrant as specified in its charter)

|                                                                   |                                       
|------------------------------------------------------------------ | --------------------------------------
|Delaware                                                           | 11-1988350                            
|(State or other
  jurisdiction of
  incorporation or organization) | (I.R.S. Employer
  Identification No.)

|                                                                                |           
|------------------------------------------------------------------------------- | ----------
|One Christina Centre, 301 North
  Walnut StreetSuite 1002, Wilmington, Delaware | 19801-2919
|(Address of principal
  executive offices)                                      | (Zip Code)
|Registrants telephone
  number including area code: (302) 594-3350             |           

|                                                                                     
|-------------------------------------------------------------------------------------
|None                                                                                 
|                                                                                     
|(Former name, former address and former fiscal year,
  if changed since last report.)

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN
GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND HAS THEREFORE OMITTED
CERTAIN ITEMS FROM THIS REPORT IN ACCORDANCE WITH THE REDUCED DISCLOSURE FORMAT
PERMITTED UNDER GENERAL INSTRUCTIONS H(2).

Indicate by check mark whether the registrant (1) has filed
  all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
  Act of 1934 during the preceding 12 months (or for such shorter period that
  the registrant was required to file such reports), and (2) has been subject
  to such filing requirements for the past 90 days.Yes x
No o

Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of  accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act. (Check one):

Large accelerated filer o      
Accelerated filer o     Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company
  (as defined in Rule 12b-2 of the Exchange Act). Yes o   No 
x

Indicate the number of shares outstanding of each of
the issuers classes of common stock, as of the latest practicable date.

|                                        |                               
|--------------------------------------- | ------------------------------
|Class                                   | Outstanding at August 11, 2006
|                                        |                               
|Common Stock (par value $.10 per share) | 1,504,938 Shares              

---



AMERICAN EXPRESS CREDIT CORPORATION

FORM 10-Q

INDEX

|         |                       |                                                                                                               |         
|-------- | --------------------- | ------------------------------------------------------------------------------------------------------------- | --------
|         |                       |                                                                                                               | Page No.
|         |                       |                                                                                                               |         
|PART I.  | FINANCIAL INFORMATION |                                                                                                              
|         |                       |                                                                                                               |         
|         | Item 1.               | Financial Statements                                                                                          |         
|         |                       |                                                                                                               |         
|         |                       | Consolidated Statements of Income
  and Retained Earnings  Three and six months ended June 30, 2006 and 2005 | 3       
|         |                       |                                                                                                               |         
|         |                       | Consolidated Balance Sheets  June 30, 2006 and December 31, 2005                                             | 4       
|         |                       |                                                                                                               |         
|         |                       | Consolidated Statements of Cash
  Flows  Six months ended June 30, 2006 and 2005                             | 5       
|         |                       |                                                                                                               |         
|         |                       | Notes to Consolidated Financial
  Statements                                                                  | 6       
|         |                       |                                                                                                               |         
|         | Item 2.               | Managements Discussion and Analysis of Financial Condition and Results of Operations                         | 9       
|         |                       |                                                                                                               |         
|         | Item 4.               | Controls and Procedures                                                                                       | 15      
|         |                       |                                                                                                               |         
|PART II. | OTHER INFORMATION     |                                                                                                              
|         |                       |                                                                                                               |         
|         | Item 6.               | Exhibits                                                                                                      | 16      
|         |                       |                                                                                                               |         
|         |                       | Signatures                                                                                                    | 17      
|         |                       |                                                                                                               |         
|         |                       | Exhibit Index                                                                                                 | E-1     

- 2 -

---



AMERICAN EXPRESS CREDIT CORPORATION

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS(Millions)
(Unaudited)

|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|------------------------------------------------------------------------- |  | ------------------------------- | ----- | ----------------------------- | - | ----- |  | ---- | ----- | - | - | ----- | 
|                                                                          |  | Three
  Months Ended
  June 30, |       | Six Months
  Ended
  June 30, |  
|                                                                          |  | 2006                            |       | 2005                          |   | 2006  |  | 2005 |      
|                                                                          |  |                                 |       |                               |   |       |  |      |      
|                                                                         
|Revenues                                                                  |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|                                                                         
|Discount revenue
  earned from purchased cardmember receivables and loans |  | $                               | 506   |                               | $ | 433   |  | $    | 968   |   | $ | 781   | 
|Finance charge
  revenue                                                  |  |                                 | 11    |                               |   | 18    |  |      | 24    |   |   | 36    | 
|Interest income
  from investments                                        |  |                                 | 48    |                               |   | 29    |  |      | 97    |   |   | 65    | 
|Interest income
  from affiliates                                         |  |                                 | 124   |                               |   | 94    |  |      | 240   |   |   | 186   | 
|Other                                                                     |  |                                 |      |                               |   | 1     |  |      | 4     |   |   | 2     | 
|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|Total revenues                                                            |  |                                 | 689   |                               |   | 575   |  |      | 1,333 |   |   | 1,070 | 
|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|Expenses                                                                  |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|Provision for
  losses, net of recoveries (1)                             |  |                                 | 73    |                               |   | 156   |  |      | 215   |   |   | 284   | 
|Interest expense                                                          |  |                                 | 322   |                               |   | 233   |  |      | 602   |   |   | 458   | 
|Interest expense
  to affiliates                                          |  |                                 | 72    |                               |   | 39    |  |      | 147   |   |   | 75    | 
|Other                                                                     |  |                                 | 23    |                               |   | 8     |  |      | 26    |   |   | 10    | 
|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|Total expenses                                                            |  |                                 | 490   |                               |   | 436   |  |      | 990   |   |   | 827   | 
|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|Pretax income                                                             |  |                                 | 199   |                               |   | 139   |  |      | 343   |   |   | 243   | 
|Income tax
  provision                                                    |  |                                 | 32    |                               |   | 35    |  |      | 50    |   |   | 44    | 
|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|Net income                                                                |  |                                 | 167   |                               |   | 104   |  |      | 293   |   |   | 199   | 
|Dividends                                                                 |  |                                 | (100  | )                             |   |      |  |      | (100  | ) |   |      | 
|Retained
  earnings at beginning of period                                |  |                                 | 3,206 |                               |   | 2,960 |  |      | 3,080 |   |   | 2,865 | 
|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 
|Retained
  earnings at end of period                                      |  | $                               | 3,273 |                               | $ | 3,064 |  | $    | 3,273 |   | $ | 3,064 | 
|                                                                          |  |                                 |       |                               |   |       |  |      |       |   |   |       | 

See Notes to Consolidated FinancialStatements.

|    |                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Provision for losses are shown net of recoveries of $37
  and $34 for the three months ended June 30, 2006 and 2005, respectively, and
  $87 and $73 for the six months ended June 30, 2006 and 2005, respectively.

- 3 -

---



AMERICAN EXPRESS CREDIT CORPORATION

CONSOLIDATED BALANCE SHEETS(Millions, except share data)
(Unaudited)

|                                                                                                         |  |                 |        |                     |   |        |  
|-------------------------------------------------------------------------------------------------------- |  | --------------- | ------ | ------------------- | - | ------ | -
|                                                                                                         |  | June 30,
  2006 |        | December
  31, 2005 |  
|                                                                                                         |  |                 |        |                     |  
|                                                                                                        
|Assets                                                                                                   |  |                 |        |                     |   |        |  
|                                                                                                         |  |                 |        |                     |   |        |  
|Cash and cash
  equivalents                                                                              |  | $               | 1,436  |                     | $ | 1,051  |  
|Investment
  securities                                                                                  |  |                 | 1,759  |                     |   | 2,996  |  
|Investment securities
        restricted                                                                 |  |                 | 1,213  |                     |   |       |  
|Cardmember
  receivables, less reserves:                                                                 |  |                 |        |                     |   |        |  
|2006, $665;
  2005, $671                                                                                 |  |                 | 25,160 |                     |   | 23,750 |  
|Cardmember
  loans, less reserves:                                                                       |  |                 |        |                     |   |        |  
|2006, $9; 2005,
  $15                                                                                    |  |                 | 312    |                     |   | 554    |  
|Loans and
  deposits with affiliates                                                                     |  |                 | 8,801  |                     |   | 8,254  |  
|Deferred charges
  and other assets                                                                      |  |                 | 449    |                     |   | 764    |  
|                                                                                                         |  |                 |        |                     |   |        |  
|Total assets                                                                                             |  | $               | 39,130 |                     | $ | 37,369 |  
|                                                                                                         |  |                 |        |                     |   |        |  
|                                                                                                         |  |                 |        |                     |   |        |  
|Liabilities
  and Shareholders Equity                                                                   |  |                 |        |                     |   |        |  
|                                                                                                         |  |                 |        |                     |   |        |  
|Short-term debt                                                                                          |  | $               | 7,333  |                     | $ | 7,939  |  
|Short-term debt
  with affiliates                                                                        |  |                 | 7,702  |                     |   | 8,043  |  
|Current portion
  of long-term debt                                                                      |  |                 | 2,300  |                     |   | 2,300  |  
|Long-term debt                                                                                           |  |                 | 17,434 |                     |   | 14,629 |  
|                                                                                                         |  |                 |        |                     |   |        |  
|Total debt                                                                                               |  |                 | 34,769 |                     |   | 32,911 |  
|Due to
  affiliates                                                                                      |  |                 | 505    |                     |   | 1,021  |  
|Accrued interest
  and other liabilities                                                                 |  |                 | 361    |                     |   | 166    |  
|                                                                                                         |  |                 |        |                     |   |        |  
|Total
  liabilities                                                                                      |  |                 | 35,635 |                     |   | 34,098 |  
|                                                                                                         |  |                 |        |                     |   |        |  
|                                                                                                         |  |                 |        |                     |   |        |  
|Shareholders
  Equity                                                                                   |  |                 |        |                     |   |        |  
|                                                                                                         |  |                 |        |                     |   |        |  
|Common stock,
  $.10 par value, authorized 3 million shares; issued and outstanding 1.5
  million shares |  |                 | 1      |                     |   | 1      |  
|Capital surplus                                                                                          |  |                 | 161    |                     |   | 161    |  
|Retained
  earnings                                                                                      |  |                 | 3,273  |                     |   | 3,080  |  
|Accumulated
  other comprehensive income (loss):                                                         |  |                 |        |                     |   |        |  
|Net unrealized
  securities losses, net of tax                                                           |  |                 | (20    | )                   |   | (16    | )
|Net unrealized
  derivatives gains, net of tax                                                           |  |                 | 77     |                     |   | 57     |  
|Foreign currency
  translation adjustments                                                               |  |                 | 3      |                     |   | (12    | )
|                                                                                                         |  |                 |        |                     |   |        |  
|Total accumulated
  other comprehensive income                                                           |  |                 | 60     |                     |   | 29     |  
|                                                                                                         |  |                 |        |                     |   |        |  
|Total
  shareholders equity                                                                             |  |                 | 3,495  |                     |   | 3,271  |  
|                                                                                                         |  |                 |        |                     |   |        |  
|Total
  liabilities and shareholders equity                                                             |  | $               | 39,130 |                     | $ | 37,369 |  
|                                                                                                         |  |                 |        |                     |   |        |  

See Notes to Consolidated FinancialStatements.

- 4 -

---



AMERICAN EXPRESS CREDIT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS(Millions)
(Unaudited)

|                                                                                                                                      |  |                               |        |      |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------ | ---- | - | ------ | -
|                                                                                                                                      |  | Six Months
  Ended
  June 30, |       
|                                                                                                                                      |  | 2006                          |        | 2005 |  
|                                                                                                                                      |  |                               |        |      |  
|Cash Flows from Operating
  Activities                                                                                                |  |                               |        |      |   |        |  
|Net income                                                                                                                            |  | $                             | 293    |      | $ | 199    |  
|Adjustments to
  reconcile net income to net cash provided by operating activities:                                                   |  |                               |        |      |   |        |  
|Provision for
  losses                                                                                                                |  |                               | 302    |      |   | 357    |  
|Amortization and
  other                                                                                                              |  |                               | 4      |      |   | 7      |  
|Changes in
  operating assets and liabilities:                                                                                        |  |                               |        |      |   |        |  
|Deferred tax
  assets                                                                                                                 |  |                               | (20    | )    |   | (23    | )
|Due to
  affiliates                                                                                                                   |  |                               | 10     |      |   | 62     |  
|Other operating
  assets and liabilities                                                                                              |  |                               | 500    |      |   | 62     |  
|                                                                                                                                      |  |                               |        |      |   |        |  
|Net cash
  provided by operating activities                                                                                           |  |                               | 1,089  |      |   | 664    |  
|                                                                                                                                      |  |                               |        |      |   |        |  
|Cash Flows from Investing
  Activities                                                                                                |  |                               |        |      |   |        |  
|Net decrease in
  cardmember receivables and loans                                                                                    |  |                               | 27     |      |   | 759    |  
|Net increase of
  cardmember receivables and participation interests in sellers interest in
  cardmember receivables from affiliates |  |                               | (1,497 | )    |   | (1,909 | )
|Purchase of
  investments                                                                                                             |  |                               | (2,003 | )    |   |       |  
|Maturities of
  investments                                                                                                           |  |                               | 2,019  |      |   | 179    |  
|Net increase in
  loans and deposits with affiliates                                                                                  |  |                               | (328   | )    |   | (316   | )
|Net decrease in
  due to affiliates                                                                                                   |  |                               | (525   | )    |   | (1,844 | )
|                                                                                                                                      |  |                               |        |      |   |        |  
|Net cash used in
  investing activities                                                                                               |  |                               | (2,307 | )    |   | (3,131 | )
|                                                                                                                                      |  |                               |        |      |   |        |  
|Cash Flows from Financing
  Activities                                                                                                |  |                               |        |      |   |        |  
|Net (decrease)
  increase in short-term debt with affiliates with maturities of ninety days or
  less                                 |  |                               | (341   | )    |   | 1,755  |  
|Net decrease in
  short-term debt with maturities of ninety days or less                                                              |  |                               | (1,082 | )    |   | (266   | )
|Issuance of debt                                                                                                                      |  |                               | 8,100  |      |   | 975    |  
|Redemption of
  debt                                                                                                                  |  |                               | (4,974 | )    |   | (2,267 | )
|Dividends paid                                                                                                                        |  |                               | (100   | )    |   |       |  
|                                                                                                                                      |  |                               |        |      |   |        |  
|Net cash provided
        by financing activities                                                                                     |  |                               | 1,603  |      |   | 197    |  
|                                                                                                                                      |  |                               |        |      |   |        |  
|Net increase
  (decrease) in cash and cash equivalents                                                                                |  |                               | 385    |      |   | (2,270 | )
|Cash and cash
  equivalents at beginning of period                                                                                    |  |                               | 1,051  |      |   | 3,802  |  
|                                                                                                                                      |  |                               |        |      |   |        |  
|Cash and cash
  equivalents at end of period                                                                                          |  | $                             | 1,436  |      | $ | 1,532  |  
|                                                                                                                                      |  |                               |        |      |   |        |  

See
Notes to Consolidated Financial Statements.

- 5 -

---



AMERICAN EXPRESS CREDIT CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Unaudited)

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | Basis
  of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The accompanying Consolidated Financial Statements
  should be read in conjunction with the financial statements in the Annual
  Report on Form 10-K of American Express Credit Corporation, including its
  subsidiaries where appropriate (Credco), for the year ended December 31,
  2005. Certain prior year amounts have been reclassified to conform to the
  current year presentation. Significant accounting policies disclosed therein
  have not changed. Credco is a wholly-owned subsidiary of American Express
  Travel Related Services Company, Inc. (TRS), which is a wholly-owned
  subsidiary of American Express Company (American Express). American Express Overseas
  Credit Corporation Limited together with its subsidiaries (AEOCC), Credco
  Receivables Corporation (CRC), Credco Finance, Inc. together with its
  subsidiaries (CFI), American Express Canada Credit Corporation (AECCC),
  American Express Canada Finance Limited (AECFL), American Express Capital
  Australia (AECA), American Express Sterling Funding Limited Partnership
  (AESLP) together with its subsidiaries and American Express Euro Funding
  Limited Partnership (AEELP) are wholly-owned subsidiaries of Credco.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The interim financial information in this report has
  not been audited. In the opinion of management, all adjustments necessary for
  a fair statement of the consolidated financial position and the consolidated
  results of operations for the interim periods have been made. All adjustments
  made were of a normal, recurring nature. Results of operations reported for
  interim periods are not necessarily indicative of results for the entire
  year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Recently Issued Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Financial Accounting
  Standards Board (FASB) has recently issued the following accounting
  standards, which are effective as of January 1, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | FASB Interpretation No.
  48, Accounting for Uncertainty in Income Taxes (FIN 48) is an
  interpretation which clarifies FASB Statement No. 109, Accounting for Income
  Taxes. This Statement addresses uncertainty in income taxes recognized in an
  enterprises financial statements and prescribes a recognition threshold and
  measurement of a tax position taken or expected to be taken in a tax return.
  Any cumulative impact resulting from the adoption of FIN 48 would be recorded
  as an adjustment to beginning retained earnings. Credco is currently
  evaluating the impact of FIN 48 on Credcos Consolidated Financial
  Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Statement of Financial
  Accounting Standards (SFAS) No. 156, Accounting for Servicing of Financial
  Assets  an amendment of FASB Statement No. 140 (SFAS No. 156) simplifies
  the accounting for servicing assets and liabilities. The adoption of SFAS No.
  156 is not anticipated to have an impact on Credcos Consolidated Financial
  Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | SFAS No. 155, Accounting
  for Certain Hybrid Financial Instruments  an amendment of FASB Statements
  No. 133 and 140 (SFAS No. 155) addresses the application of beneficial
  interests in securitized financial assets. The adoption of SFAS No. 155 is
  not anticipated to have an impact on Credcos Consolidated Financial
  Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

- 6 -

---



AMERICAN EXPRESS CREDIT CORPORATION

|   |                                                                                              
|-- | ---------------------------------------------------------------------------------------------
|2. | Investment
  Securities                                                                      
|  
|   | The following is a summary of investment securities
  at June 30, 2006 and December 31, 2005:

|                                                           |  |      |       |                            |   |                             |  |              |     |      |   |                            |  |                             |       |              |   |   |  |   |     |   |   |       | 
|---------------------------------------------------------- |  | ---- | ----- | -------------------------- | - | --------------------------- |  | ------------ | --- | ---- | - | -------------------------- |  | --------------------------- | ----- | ------------ | - | - |  | - | --- | - | - | ----- | 
|Available-for-Sale                                         |  | 2006 |       | 2005                       |  
|                                                           |  |      |       |                            |  
|(Millions)                                                 |  | Cost |       | Gross
  Unrealized
  Gains |   | Gross
  Unrealized
  Losses |  | Fair
  Value |     | Cost |   | Gross
  Unrealized
  Gains |  | Gross
  Unrealized
  Losses |       | Fair
  Value |  
|                                                           |  |      |       |                            |   |                             |  |              |     |      |   |                            |  |                             |       |              |  
|American Express Credit Account Master Trust Class C Notes |  | $    |      |                            | $ |                            |  | $            |    |      | $ |                           |  | $                           | 19    |              | $ |  |  | $ |    |   | $ | 19    | 
|U.S. Treasury and federal agency securities                |  |      | 1,781 |                            |   | 2                           |  |              | (24 | )    |   | 1,759                      |  |                             | 3,001 |              |   |  |  |   | (24 | ) |   | 2,977 | 
|U.S. Treasury and federal agency securities - restricted   |  |      | 1,222 |                            |   | 1                           |  |              | (10 | )    |   | 1,213                      |  |                             |      |              |   |  |  |   |    |   |   |      | 
|                                                           |  |      |       |                            |   |                             |  |              |     |      |   |                            |  |                             |       |              |   |   |  |   |     |   |   |       | 
|Total                                                      |  | $    | 3,003 |                            | $ | 3                           |  | $            | (34 | )    | $ | 2,972                      |  | $                           | 3,020 |              | $ |  |  | $ | (24 | ) | $ | 2,996 | 
|                                                           |  |      |       |                            |   |                             |  |              |     |      |   |                            |  |                             |       |              |   |   |  |   |     |   |   |       | 

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | During the six months
  ended June 30, 2006, Credco purchased $2.0 billion of federal agency
  securities. During the six months ended June 30, 2006, $19 million of Class C
  Notes and $2.0 billion of U.S. Treasury securities matured, respectively. All
  of Credcos investment securities are Available-for-Sale. There were no
  realized gains or losses for the six months ended June 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | In conjunction with its liquidity investment portfolio,
        Credco entered into securities lending agreements in June 2006 with financial
        institutions. Under these agreements, certain investment securities are
        loaned on an overnight basis to financial institutions and are secured
        by collateral equal to at least 102 percent of the fair market value of
        the investment securities lent. Collateral received by Credco can be in
        the form of cash or marketable U.S. Treasury or federal agency securities.
        Credco may only retain or sell these securities in the event of a borrower
        default. Credcos loaned investment securities have been reclassified
        as investment securities restricted on the Consolidated Balance Sheet
        and are now considered restricted and pledged assets. The marketable securities
        received as collateral are not recorded in its Consolidated Balance Sheet,
        as Credco is not permitted to sell or repledge these securities absent
        a borrower default. Fees received from the securities lending transactions
        are recorded as investment income. At June 30, 2006, approximately $1.2
        billion of investment securities were loaned under these agreements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3. | Comprehensive
  Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Comprehensive income is defined as the aggregate
  change in shareholders equity, excluding changes in ownership interests. The
  components of comprehensive income for the three and six months ended June
  30, 2006 and 2005, were as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|                                               |  |                                 |     |                               |   |      |   |      |     |   |   |     |  
|---------------------------------------------- |  | ------------------------------- | --- | ----------------------------- | - | ---- | - | ---- | --- | - | - | --- | -
|(Millions)                                     |  | Three
  Months Ended
  June 30, |     | Six Months
  Ended
  June 30, |  
|                                               |  |                                 |     |                               |  
|                                               |  | 2006                            |     | 2005                          |   | 2006 |   | 2005 |    
|                                               |  |                                 |     |                               |   |      |   |      |    
|Net income                                     |  | $                               | 167 |                               | $ | 104  |   | $    | 293 |   | $ | 199 |  
|Change in:                                     |  |                                 |     |                               |   |      |   |      |     |   |   |     |  
|Net unrealized
  securities losses, net of tax |  |                                 | (7  | )                             |   | 9    |   |      | (4  | ) |   | 1   |  
|Net unrealized
  derivatives gains, net of tax |  |                                 | 14  |                               |   | (32  | ) |      | 20  |   |   | 35  |  
|Foreign currency
  translation adjustments     |  |                                 | 21  |                               |   | (4   | ) |      | 15  |   |   | (4  | )
|                                               |  |                                 |     |                               |   |      |   |      |     |   |   |     |  
|Total comprehensive income                     |  | $                               | 195 |                               | $ | 77   |   | $    | 324 |   | $ | 231 |  
|                                               |  |                                 |     |                               |   |      |   |      |     |   |   |     |  

- 7 -

---



AMERICAN EXPRESS CREDIT CORPORATION

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. | Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The taxable income of Credco is included in the
  consolidated U.S. federal income tax return of American Express. Under an
  agreement with TRS, taxes are recognized on a separate company basis. If benefits for all future tax deductions,
  foreign tax credits and net operating losses cannot be recognized on a
  separate company basis, such benefits are then recognized based upon a share,
  derived by formula, of those deductions and credits that are recognizable on
  a TRS consolidated reporting basis.                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | American Express is under
  continuous examination by the Internal Revenue Service (IRS) and tax
  authorities in other countries and states in which American Express has
  significant business operations. The tax years under examination vary by
  jurisdiction. Credco routinely assesses the likelihood of additional
  assessments in each of the taxing jurisdictions resulting from these
  examinations. Tax reserves have been established that Credco believes to be
  adequate in relation to the potential for additional assessments. Once
  established, reserves are adjusted when there is more information available,
  a change in circumstance or when an event occurs necessitating a change to
  the reserves.

- 8 -

---



AMERICAN EXPRESS CREDIT CORPORATION

Item 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

American Express Credit
Corporation (Credco) was incorporated in Delaware in 1962 and was acquired by
American Express Company (American Express) in December 1965. On January 1,
1983, Credco became a wholly-owned subsidiary of American Express Travel
Related Services Company, Inc. (TRS), a wholly-owned subsidiary of American
Express. Credco is primarily engaged in the business of financing most
non-interest-bearing cardmember receivables arising from the use of the
American Express® card, the American Express® Gold
card, Platinum card® and Corporate card issued in the United
States, and in designated currencies outside the United States. Credco also
purchases certain interest-bearing and discounted revolving loans and extended
payment plan receivables comprised of American Express credit cards, Sign &
Travel® and Extended Payment Option receivables.
American Express cards and American Express credit cards are collectively
referred to herein as the card.

Results of Operations for the Six Months Ended June 30, 2006
and 2005

Revenues
and Expenses

Credcos consolidated net income rose 47 percent to
$293 million for the six months ended June 30, 2006 as compared to the six
months ended June 30, 2005. The year-over-year increase was primarily due to
the increase of discount revenue earned on purchased cardmember receivables and
loans and the interest income from affiliates, offset by the increase of
interest expense to affiliates and others.

Discount
Revenue Earned on Purchased Cardmember Receivables and Loans

Discount revenue increased from $781 million for the six months
  ended June 30, 2005 to $968 million or 24 percent for the same period in 2006
  due to an increase in both volume of receivables purchased and discount rates.
  Volume for the six months ended June 30, 2006 was 12 percent higher than the
  same period a year ago primarily due to an increase in customer spending. Discount
  rates, which vary over time due to changes in market interest rates or changes
  in the collectibility of the receivables, increased an average of approximately
  7 basis points compared to the six months ended June 30, 2005.

Interest Income from Investments

Interest income from
investments increased approximately $32 million or 49 percent compared to the
same period in the prior year due to a higher interest rate environment as well
as the replacement of matured U.S. Treasury securities with higher yielding
federal agency securities. The average rate on the total investment portfolio
for the six months ended June 30, 2006, increased approximately 74 basis points
year-over-year.

Interest Income from Affiliates

The increase in interest income from affiliates of $54 million
  or 29 percent for the six months ended June 30, 2006 compared to the six months
  ended June 30, 2005 is primarily due to an increase in the volume of loans.
  The average rate charged to affiliates during the six months ended June 30,
  2006 was also 14 basis points higher than the rate charged in the same six month
  period a year ago, primarily due to the floating rate interest-bearing borrowings
  with affiliates.

Provision for Losses, Net of Recoveries

The provision for losses,
net of recoveries decreased $69 million or 24 percent for the six months ended
June 30, 2006 compared to the six months ended June 30, 2005 reflecting a lower
loss rate and improved results from collection activities.

- 9 -

---



AMERICAN EXPRESS CREDIT CORPORATION

Interest Expense and Interest Expense to Affiliates

Interest expense and interest expense to affiliates increased
  31 percent and 96 percent, respectively, for the six months ended June 30, 2006
  compared to the same period a year ago. The increase is primarily due to an
  overall higher effective cost of funds. The average rate due to affiliates during
  the six months ended June 30, 2006 was 75 basis points higher than the same
  period a year ago, primarily due to the floating rate interest-bearing borrowings
  due to affiliates.

The following is an analysis of the changes
attributable to the increase (decrease) in key revenue and expense accounts for
the six month period ended June 30, 2006, compared with the six month period
ended June 30, 2005 (millions):

|                                                                         |  |   |      |  
|------------------------------------------------------------------------ |  | - | ---- | -
|Discount revenue
  earned on purchased cardmember receivables and loans: |  |   |      |  
|Volume of
  receivables purchased                                        |  | $ | 92   |  
|Discount rates                                                           |  |   | 95   |  
|                                                                         |  |   |      |  
|Total                                                                    |  | $ | 187  |  
|                                                                         |  |   |      |  
|                                                                         |  |   |      |  
|Finance charge
  revenue:                                                |  |   |      |  
|Volume of loans
  purchased                                              |  | $ | (9   | )
|Interest rates                                                           |  |   | (3   | )
|                                                                         |  |   |      |  
|Total                                                                    |  | $ | (12  | )
|                                                                         |  |   |      |  
|                                                                         |  |   |      |  
|Interest income
  from investments:                                      |  |   |      |  
|Average
  investments outstanding                                        |  | $ | (6   | )
|Interest rates                                                           |  |   | 38   |  
|                                                                         |  |   |      |  
|Total                                                                    |  | $ | 32   |  
|                                                                         |  |   |      |  
|                                                                         |  |   |      |  
|Interest income
  from affiliates:                                       |  |   |      |  
|Average loans
  and deposits with affiliates                             |  | $ | 42   |  
|Interest rates                                                           |  |   | 12   |  
|                                                                         |  |   |      |  
|Total                                                                    |  | $ | 54   |  
|                                                                         |  |   |      |  
|                                                                         |  |   |      |  
|Provision for
  losses, net of recoveries:                               |  |   |      |  
|Volume of
  receivables purchased                                        |  | $ | 45   |  
|Provision rates
  and volume of recoveries                               |  |   | (114 | )
|                                                                         |  |   |      |  
|Total                                                                    |  | $ | (69  | )
|                                                                         |  |   |      |  
|                                                                         |  |   |      |  
|Interest
  expense:                                                      |  |   |      |  
|Average debt
  outstanding                                               |  | $ | 23   |  
|Interest rates                                                           |  |   | 121  |  
|                                                                         |  |   |      |  
|Total                                                                    |  | $ | 144  |  
|                                                                         |  |   |      |  
|                                                                         |  |   |      |  
|Interest expense
  to affiliates:                                        |  |   |      |  
|Average debt
  outstanding                                               |  | $ | 17   |  
|Interest rates                                                           |  |   | 55   |  
|                                                                         |  |   |      |  
|Total                                                                    |  | $ | 72   |  
|                                                                         |  |   |      |  

Income
Taxes

Credcos effective tax rate for the six month period ended
  June 30, 2006 was 15 percent compared with 18 percent during the six month period
  ended June 30, 2005. The effective tax rate was lower in 2006 as compared to
  2005 primarily as a result of higher tax expense in 2005 due to uncertainty
  regarding Credco’s ability to obtain certain tax benefits attributable
  to foreign subsidiaries partially offset by a decrease in 2006 in the proportion
  of foreign subsidiary pretax income to total pretax income.

- 10 -

---



AMERICAN EXPRESS CREDIT CORPORATION

Cardmember
Receivables

At June 30, 2006 and December 31, 2005, Credco owned
$25.8 billion and $24.4 billion, respectively, of cardmember receivables and
participation interests in cardmember receivables, representing 99 percent and
98 percent of the total cardmember receivables and loans owned at June 30, 2006
and December 31, 2005, respectively.

Credco generally purchases,
without recourse, cardmember receivables and cardmember loans arising from the
use of the card throughout the world pursuant to agreements with TRS and
certain of its subsidiaries that issue the card. During the six months ended
June 30, 2006 and December 31, 2005, Credco purchased $138 billion and $136
billion of cardmember receivables, respectively.

Participation interests in
cardmember receivables represent undivided interests in the cash flows of the
non-interest-bearing cardmember receivables and are purchased without recourse
by Credco Receivables Corporation (CRC), a wholly-owned subsidiary of Credco.
During May 2005, TRS established the American Express Issuance Trust (AEIT),
which is used to securitize cardmember receivables originated by TRS. AEIT is a
non-qualifying special purpose entity that is consolidated by American Express
Receivables Financing Corporation V LLC (RFC V). RFC V, in turn, is
consolidated by TRS. Beginning in May 2005, CRC purchased participation
interests without recourse held by AEIT from RFC V. Prior to May 2005, CRC
purchased participation interests without recourse from American Express
Receivables Financing Corporation (RFC). These participation interests
represented undivided interests in cardmember receivables transferred to
American Express Master Trust (AEMT) by TRS, which originated the receivables.
AEMT was a non-qualifying special purpose entity that was consolidated by TRS.
AEMT was dissolved during the third quarter of 2005. At June 30, 2006
and December 31, 2005, CRC owned approximately $7.2 billion and $8.6 billion of
participation interests purchased from RFC V, respectively.

The following table summarizes selected information
related to the cardmember receivable portfolio:

|                                                                |  |               |        |                        |   |               |   |   |        |  
|--------------------------------------------------------------- |  | ------------- | ------ | ---------------------- | - | ------------- | - | - | ------ | -
|As of and for six months ended (Millions, except
  percentages) |  | June 30, 2006 |        | December
  31, 
  2005 |   | June 30, 2005 |  
|                                                                |  |               |        |                        |   |               |   |   |        |  
|Total cardmember receivables                                    |  | $             | 25,825 |                        | $ | 24,421        |   | $ | 22,799 |  
|90 days past due as a % of total                                |  |               | 2.0    | %                      |   | 1.7           | % |   | 1.9    | %
|Loss reserves                                                   |  | $             | 665    |                        | $ | 671           |   | $ | 651    |  
|as a % of
  receivables                                         |  |               | 2.6    | %                      |   | 2.7           | % |   | 2.8    | %
|as a % of 90 days
  past due                                    |  |               | 125    | %                      |   | 159           | % |   | 149    | %
|Write-offs, net of recoveries                                   |  | $             | 224    |                        | $ | 320           |   | $ | 258    |  
|Net write-off rate (1)                                          |  |               | 0.16   | %                      |   | 0.24          | % |   | 0.21   | %
|Average life of cardmember receivables (in days) (2)            |  |               | 32     |                        |   | 31            |   |   | 33     |  
|                                                                |  |               |        |                        |   |               |   |   |        |  

|    |                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Credcos write-offs, net of
  recoveries, expressed as a percentage of the volume of cardmember receivables
  purchased by Credco in each of the periods indicated.                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                       
|(2) | Represents the average life
  of cardmember receivables owned by Credco, based upon the ratio of the
  average amount of both billed and unbilled receivables owned by Credco at the
  end of each month, during the periods indicated, to the volume of cardmember
  receivables purchased by Credco.

Cardmember receivables increased $1.4 billion from December 31,
  2005, as a result of higher corporate and small business cardmember receivables
  purchased during the six months ended June 30, 2006. The cardmember receivables
  purchased for the six months ended June 30, 2006 increased approximately 12
  percent from the cardmember receivables purchased during the six months ended June 30, 2005 due to overall
  business growth.

Cardmember
Loans

At June 30, 2006 and December 31, 2005, Credco owned
cardmember loans totaling $0.3 billion and $0.6 billion, respectively,
representing 1 percent and 2 percent of all interests in cardmember receivables
and loans owned by

- 11 -

---



AMERICAN EXPRESS CREDIT CORPORATION

Credco at June 30, 2006 and December 31, 2005,
respectively. These loans consist of certain interest-bearing and discounted
extended payment plan receivables comprised principally of American Express
credit card, Sign & Travel®
and Extended Payment Option receivables and lines of credit and loans to
American Express Bank Ltd. customers. During
the six months ended June 30, 2006 and December 31, 2005, Credco purchased $658
million and $653 million of cardmember loans, respectively.

The following table summarizes selected information
related to the cardmember loan portfolio:

|                                                                |  |                 |      |                  |   |              |   |   |      |  
|--------------------------------------------------------------- |  | --------------- | ---- | ---------------- | - | ------------ | - | - | ---- | -
|As of and for six months ended (Millions, except
  percentages) |  | June 30,
  2006 |      | December 31,2005 |   | June 30,2005 |  
|                                                                |  |                 |      |                  |   |              |   |   |      |  
|Total cardmember
  loans                                        |  | $               | 321  |                  | $ | 569          |   | $ | 570  |  
|Past due
  cardmember loans as a % of total:                    |  |                 |      |                  |   |              |   |   |      |  
|30-89 days                                                      |  |                 | 6.2  | %                |   | 4.9          | % |   | 5.4  | %
|90+ days                                                        |  |                 | 2.1  | %                |   | 1.4          | % |   | 1.8  | %
|Loss reserves                                                   |  | $               | 9    |                  | $ | 15           |   | $ | 25   |  
|as a % of
  cardmember loans                                    |  |                 | 3.0  | %                |   | 2.6          | % |   | 4.3  | %
|as a % of past
  due                                            |  |                 | 37   | %                |   | 41           | % |   | 59   | %
|Write-offs, net
  of recoveries                                 |  | $               | 5    |                  | $ | 8            |   | $ | 12   |  
|Net write-off
  rate (1)                                        |  |                 | 2.11 | %                |   | 2.98         | % |   | 4.15 | %
|                                                                |  |                 |      |                  |   |              |   |   |      |  

|    |                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Credcos write-offs, net of
  recoveries, expressed as a percentage of the average amount of cardmember
  loans owned by Credco at the beginning of the year and at the end of each
  month in each of the periods indicated.

Cardmember loans decreased $248 million from December
31, 2005 and $249 million from June 30, 2005 due primarily to the sale of
certain Hong Kong and New Zealand loan portfolios, as well as a slight decline
in business volume and foreign exchange rates.

Reserves
for Cardmember Receivables and Cardmember Loans

The following is an analysis of the reserves for
cardmember receivables and cardmember loans:

|Six months ended (Millions)  |  | June 30,2006 |      | June 30,
  2005 |  
|---------------------------- |  | ------------ | ---- | --------------- | -
|                             |  |              |      |                 |  
|Balance, beginning of period |  | $            | 686  |                 | $
|Provision for losses         |  |              | 302  |                 |  
|Accounts written-off         |  |              | (316 | )               |  
|Other                        |  |              | 2    |                 |  
|                             |  |              |      |                 |  
|Balance, end of period       |  | $            | 674  |                 | $
|                             |  |              |      |                 |  

Loans and Deposits with Affiliates

Components of loans and
deposits with affiliates were as follows:

|                                         |  |                 |       |                    |   |                 |  |   |       | 
|---------------------------------------- |  | --------------- | ----- | ------------------ | - | --------------- |  | - | ----- | 
|(Millions)                               |  | June 30,
  2006 |       | December 31,
 2005 |   | June 30,
  2005 | 
|                                         |  |                 |       |                    |   |                 | 
|TRS Parent                               |  | $               | 531   |                    | $ | 750             |  | $ |      | 
|TRS Subsidiaries:                        |  |                 |       |                    |   |                 |  |   |       | 
|American Express Services Europe Limited |  |                 | 3,040 |                    |   | 2,799           |  |   | 2,841 | 
|American Express Australia Limited       |  |                 | 3,168 |                    |   | 2,489           |  |   | 2,269 | 
|Amex Bank of Canada                      |  |                 | 1,907 |                    |   | 1,797           |  |   | 1,673 | 
|American Express International, Inc.     |  |                 | 155   |                    |   | 419             |  |   | 416   | 
|                                         |  |                 |       |                    |   |                 |  |   |       | 
|Total                                    |  | $               | 8,801 |                    | $ | 8,254           |  | $ | 7,199 | 
|                                         |  |                 |       |                    |   |                 |  |   |       | 

- 12 -

---



AMERICAN EXPRESS CREDIT CORPORATION

Credcos loans with
affiliates represent fixed and floating rate interest-bearing intercompany
borrowings by other wholly-owned TRS subsidiaries and American Express. Of the
$8.8 billion outstanding as of June 30, 2006, $6.2 billion is due to the
transfer of cardmember receivables and cardmember loans with recourse and is
collateralized by third-party assets owned by American Express or TRS and its
subsidiaries. The average yield earned on these loans and deposits is
approximately 5.6 percent and 5.3 percent for the period ended June 30, 2006
and December 31, 2005, respectively. Loss reserves are determined for each of
these intercompany borrowing arrangements on a specific identification basis.
As of June 30, 2006, no loss reserves have been recorded and no amount of loans
is 30 days or greater past due.

Liquidity and Capital Resources

Financing Activities

Credcos funding requirements are met primarily by the
sale of commercial paper, the issuance of medium- and long-term notes,
borrowings under long-term bank credit facilities in certain international
markets and equity capital. Credco has readily sold the volume of commercial
paper necessary to meet its funding needs as well as to cover the daily
maturities of commercial paper issued. During the six months ended June 30,
2006, Credco had uninterrupted access to the commercial paper and capital
markets to fund its business operations.

The commercial paper market represents the primary source of short-term
  funding for Credco. At June 30, 2006 and December 31, 2005, Credco had $7.1
  billion and $7.7 billion of commercial paper outstanding, respectively. Average
  commercial paper outstanding was $8.9 billion and $8.6 billion for the six months
  ended June 30, 2006 and December 31, 2005, respectively. Credco currently manages
  the level of short-term debt outstanding such that its total back-up liquidity,
  including available bank credit facilities and term liquidity portfolio investment
  securities, is not less than 100 percent of net short-term debt. Net short-term
  debt, which consists of commercial paper and certain other short-term borrowings
  less cash and cash equivalents, was $5.9 billion at June 30, 2006. Based on
  the maximum available borrowings under bank credit facilities and term liquidity
  portfolio investment securities, Credcos total back-up liquidity coverage
  of net short-term debt was 198 percent at June 30, 2006.

Credco raises term funding primarily through the
issuance of medium- and long-term debt securities in the U.S. and international
capital markets. Medium-term debt is generally defined as any debt with
an original maturity greater than 12 months but less than 36 months. Long-term
debt is generally defined as any debt with an original maturity greater
than 36 months. At June 30, 2006 and December 31, 2005, Credco had an aggregate
of $10.8 billion and $8.6 billion, respectively, of medium-term debt
outstanding at fixed and floating rates, a portion of which can be extended by
the holders up to an additional five years. Credcos outstanding long-term debt
at June 30, 2006 and December 31, 2005 was $8.9 billion and $8.3 billion,
respectively.

Credco also has the ability to issue debt securities
under shelf registrations filed with the Securities and Exchange Commission
(SEC). In conjunction therewith, during the second quarter of 2006, Credco
filed a new shelf registration statement with the SEC for an unspecified amount
of debt securities to be issued from time to time. At June 30, 2006, Credco had
$12.3 billion of debt securities outstanding, issued under SEC registration statements.

Credco, TRS, American Express Overseas Credit
Corporation Limited (AEOCC), a wholly-owned subsidiary of Credco, American
Express Centurion Bank (Centurion Bank), a wholly-owned subsidiary of TRS, and
American Express Bank Ltd., a wholly-owned subsidiary of American Express have
established a program for the issuance, outside the United States, of debt
instruments to be listed on the Luxembourg Stock Exchange. As of June 30, 2006,
the maximum aggregate principal amount of debt instruments outstanding at any
one time under the program will not exceed $10.0 billion. At June 30, 2006,
$4.0 billion was outstanding under this program, including $1.3 billion issued
by TRS.

During the six months ended
June 30, 2006, American Express Canada Credit Corporation, a wholly-owned
subsidiary of Credco, issued a total of approximately $927 million of fixed
medium-term notes from its Canadian shelf registration statement. All notes
issued under this shelf registration are guaranteed by Credco. At June 30, 2006,
approximately $1.4 billion was available for issuance under this program. On
July 21, 2006, Credco issued approximately $400 million of medium-term notes.

- 13 -

---



AMERICAN EXPRESS CREDIT CORPORATION

On May 10, 2006, Credco paid
cash dividends of $100 million to TRS.

Liquidity
Portfolio

During the normal course of business, funding
activities may raise more proceeds than are necessary for immediate funding
needs. These amounts are invested principally in short-term highly liquid
securities.

Credco also maintains a term liquidity portfolio
comprised of high credit quality, highly liquid securities. At June 30, 2006,
Credco held $3.0 billion in U.S. Treasury and federal agency securities in this
portfolio. The invested amounts of the term liquidity portfolio provide back-up
liquidity, primarily for Credcos commercial paper program.

In conjunction with its
liquidity portfolio, Credco entered into securities lending agreements in June
2006 with financial institutions to enhance investment income. At June 30, 2006,
approximately $1.2 billion of investment securities were loaned under these
agreements.

Bank Credit Facilities

At June 30, 2006, Credco could have borrowed a maximum
amount of $11.9 billion (including amounts outstanding) under these bank credit facilities, with a
commensurate maximum $1.7 billion reduction in the amount available to American
Express. These facilities expire as follows (billions): 2009, $7.1; and 2010,
$4.8. As of June 30, 2006, Credco had outstanding borrowings of $3.0 billion
under these bank credit facilities, which consisted of $2.9 billion related to
the Australian credit facility and $0.1 billion related to the Canadian credit
facility. During the second quarter of
2006, the maximum capacity under the Australian credit facility was increased
by $700 million to approximately $3.0 billion. On July 21, 2006, one of the
credit facilities was terminated and replaced by a new credit facility, as a
result Credcos overall maximum amount of borrowings decreased to $10.7
billion.

The availability of the credit lines is subject to compliance
  with certain financial covenants by Credco, including the maintenance of a 1.25
  ratio of earnings to fixed charges. The ratio of earnings to fixed charges for
  Credco was 1.46 for the six months ended June 30, 2006. The ratio of earnings
  to fixed charges for American Express for the six months ended June 30, 2006 was
  2.38.

Forward-Looking Statements

Various statements have been made in this Quarterly Report on
  Form 10-Q that may constitute forward-looking statements within
  the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
  statements may also be made in Credcos other reports filed with the SEC
  and in other documents. In addition, from time to time, Credco through its management
  may make oral forward-looking statements. Forward-looking statements are subject
  to risks and uncertainties, including those identified below, which could cause
  actual results to differ materially from such statements. The words believe,
  expect, anticipate, optimistic, intend,
  plan, aim, will, may, should,
  could, would, likely and similar expressions
  are intended to identify forward-looking statements. The factors described below
  are not exclusive. Readers are cautioned not to place undue reliance on these
  forward-looking statements, which speak only as of the date on which they are
  made. Credco undertakes no obligation to update publicly or revise any forward-looking
  statements. Factors that could cause actual results to differ materially from
  Credcos forward-looking statements include, but are not limited to:

| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | credit trends and the rate of bankruptcies, which
  can affect spending on card products and debt payments by individual and
  corporate customers;
| |   |                                                                                                                                                    
| |  | Credcos ability to accurately estimate the
  provision for losses in Credcos outstanding portfolio of cardmember
  receivables and loans;        
| |   |                                                                                                                                                    
| |  | fluctuations in foreign currency exchange rates;                                                                                                   
| |   |                                                                                                                                                    
| |  | negative changes in Credcos credit ratings, which
  could result in decreased liquidity and higher borrowing costs;                               
| |   |                                                                                                                                                    
| |  | the effect of fluctuating interest rates, which
  could affect Credcos borrowing costs; and                                                       

- 14 -

---



AMERICAN EXPRESS CREDIT CORPORATION

| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | the impact on American Express Companys business
  resulting from continuing geopolitical uncertainty.

OTHER REPORTING MATTERS

Accounting Developments

See Recently Issued
Accounting Standards section of Note 1 to the Consolidated Financial
Statements.

Item
4. CONTROL AND PROCEDURES

Credcos management, with
the participation of Credcos Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of Credcos disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end
of the period covered by this report. Based on such evaluation, Credcos Chief
Executive Officer and Chief Financial Officer have concluded that, as of the
end of such period, Credcos disclosure controls and procedures are effective.
There have not been any changes in Credcos internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, Credcos
internal control over financial reporting.

- 15 -

---



AMERICAN EXPRESS CREDIT CORPORATION

PART II.
OTHER INFORMATION

|        |         
|------- | --------
|Item 6. | EXHIBITS

The list of exhibits
required to be filed as exhibits to this report are listed on page E-1 hereof,
under Exhibit Index, which is incorporated herein by reference.

- 16 -

---



AMERICAN EXPRESS CREDIT CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

AMERICAN EXPRESS CREDIT CORPORATION(Registrant)

|      |                 |  |    |                                            
|----- | --------------- |  | -- | -------------------------------------------
|DATE: | August 11, 2006 |  | By | /s/ Christopher S. Forno                   
|      |                 |  |    |                                            
|      |                 |  |    | Christopher S. Forno                       
|      |                 |  |    | President and Chief Executive Officer      
|      |                 |  |    |                                            
|DATE: | August 11, 2006 |  | By | /s/ Susanne L. Miller                      
|      |                 |  |    |                                            
|      |                 |  |    | Susanne L. Miller                          
|      |                 |  |    | Vice President and Chief Accounting Officer

- 17 -

---



AMERICAN EXPRESS CREDIT CORPORATION

EXHIBIT INDEX

Pursuant to Item 601 of Regulation S-K

|             |  |                                                                                                                                                                                           |  |                                                                                                                                      
|------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|             |  | Description                                                                                                                                                                               |  | How Filed                                                                                                                            
|             |  |                                                                                                                                                                                           |  |                                                                                                                                      
|            
|Exhibit 4(a) |  | Form of note for extendible monthly securities.                                                                                                                                           |  | Incorporated by reference to Exhibit 4(n) of the Current Report
        on Form 8-K (Commission File No. 1-6908) dated June 22, 2006.
|             |  |                                                                                                                                                                                           |  |                                                                                                                                      
|Exhibit 12.1 |  | Computation in Support of Ratio of Earnings
        to Fixed Charges of American Express Credit Corporation.                                                                              |  | Electronically filed herewith.                                                                                                       
|             |  |                                                                                                                                                                                           |  |                                                                                                                                      
|Exhibit 12.2 |  | Computation in Support of Ratio of Earnings
        to Fixed Charges of American Express Company.                                                                                         |  | Electronically filed herewith.                                                                                                       
|             |  |                                                                                                                                                                                           |  |                                                                                                                                      
|Exhibit 31.1 |  | Certification of Christopher S. Forno, Chief
        Executive Officer, pursuant to Rule 13a-14(a) promulgated under the Securities
        Exchange Act of 1934, as amended.             |  | Electronically filed herewith.                                                                                                       
|             |  |                                                                                                                                                                                           |  |                                                                                                                                      
|Exhibit 31.2 |  | Certification of David L. Yowan, Chief Financial
        Officer, pursuant to Rule 13a-14(a) promulgated under the Securities Exchange
        Act of 1934, as amended.                   |  | Electronically filed herewith.                                                                                                       
|             |  |                                                                                                                                                                                           |  |                                                                                                                                      
|Exhibit 32.1 |  | Certification of Christopher S. Forno, Chief
        Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002. |  | Electronically filed herewith.                                                                                                       
|             |  |                                                                                                                                                                                           |  |                                                                                                                                      
|Exhibit 32.2 |  | Certification of David L. Yowan, Chief Financial
        Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
        906 of the Sarbanes-Oxley Act of 2002.       |  | Electronically filed herewith.                                                                                                       

E-1

---