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

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

For the quarterly
period ended September 30, 2006

OR

oTRANSITION 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. Yesx    Noo

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 filero    Accelerated
filer    o Non-accelerated
filerx

Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso    Nox


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 November 13, 2006
|----------------------------------------- | --------------------------------
|                                          |                                 
|                                          |                                 
|Common Stock
  (par value $.10 per share) | 1,504,938 Shares                

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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 nine months ended September 30, 2006 and
  2005 |  | 3       
|         |                       |                                                                                                                       |  |         
|         |                       | Consolidated Balance Sheets 
  September 30, 2006 and December 31, 2005                                              |  | 4       
|         |                       |                                                                                                                       |  |         
|         |                       | Consolidated Statements of Cash
  Flows  Nine months ended September 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 -

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AMERICAN EXPRESS CREDIT CORPORATION

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

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

|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|------------------------------------------------------------------------- |  | ---------------------------------- | ----- | --------------------------------- | - | ----- |  | ---- | ----- | - | - | ----- | 
|                                                                          |  | Three Months Ended
  September 30, |       | Nine Months Ended
  September 30, |  
|                                                                          |  |                                    |       |                                   |  
|                                                                          |  | 2006                               |       | 2005                              |   | 2006  |  | 2005 |      
|                                                                          |  |                                    |       |                                   |   |       |  |      |      
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|Revenues                                                                  |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|Discount revenue earned from purchased
  cardmember receivables and loans |  | $                                  | 607   |                                   | $ | 400   |  | $    | 1,575 |   | $ | 1,181 | 
|Finance charge revenue                                                    |  |                                    | 11    |                                   |   | 16    |  |      | 35    |   |   | 52    | 
|Interest income from investments                                          |  |                                    | 58    |                                   |   | 31    |  |      | 155   |   |   | 96    | 
|Interest income from affiliates                                           |  |                                    | 138   |                                   |   | 97    |  |      | 378   |   |   | 283   | 
|Other                                                                     |  |                                    | 4     |                                   |   | 3     |  |      | 8     |   |   | 5     | 
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|Total revenues                                                            |  |                                    | 818   |                                   |   | 547   |  |      | 2,151 |   |   | 1,617 | 
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|Expenses                                                                  |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|Provision for losses, net of recoveries
(1)                               |  |                                    | 181   |                                   |   | 148   |  |      | 396   |   |   | 432   | 
|Interest expense                                                          |  |                                    | 334   |                                   |   | 238   |  |      | 936   |   |   | 696   | 
|Interest expense to affiliates                                            |  |                                    | 89    |                                   |   | 55    |  |      | 236   |   |   | 130   | 
|Other                                                                     |  |                                    | 33    |                                   |   | 3     |  |      | 59    |   |   | 13    | 
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|Total expenses                                                            |  |                                    | 637   |                                   |   | 444   |  |      | 1,627 |   |   | 1,271 | 
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|Pretax income                                                             |  |                                    | 181   |                                   |   | 103   |  |      | 524   |   |   | 346   | 
|Income tax provision                                                      |  |                                    | 21    |                                   |   | 11    |  |      | 71    |   |   | 55    | 
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|Net income                                                                |  |                                    | 160   |                                   |   | 92    |  |      | 453   |   |   | 291   | 
|Dividends                                                                 |  |                                    | (100  | )                                 |   |      |  |      | (200  | ) |   |      | 
|Retained earnings at beginning of period                                  |  |                                    | 3,273 |                                   |   | 3,064 |  |      | 3,080 |   |   | 2,865 | 
|                                                                         
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 
|Retained earnings at end of period                                        |  | $                                  | 3,333 |                                   | $ | 3,156 |  | $    | 3,333 |   | $ | 3,156 | 
|                                                                          |  |                                    |       |                                   |   |       |  |      |       |   |   |       | 

See Notes to Consolidated FinancialStatements.

|    |                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Provision for losses are shown net of recoveries of $30 million  and $45 million for the three months ended
  September 30, 2006 and 2005, respectively, and $117 million  and $118 million for the nine months ended
  September 30, 2006 and 2005, respectively.

- 3 -

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AMERICAN EXPRESS CREDIT CORPORATION

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

|                                                                                                         |  |                       |        |                     |   |        |  
|-------------------------------------------------------------------------------------------------------- |  | --------------------- | ------ | ------------------- | - | ------ | -
|                                                                                                         |  | September 30, 
  2006 |        | December 31,
  2005 |  
|                                                                                                         |  |                       |        |                     |  
|                                                                                                        
|Assets                                                                                                   |  |                       |        |                     |   |        |  
|                                                                                                         |  |                       |        |                     |   |        |  
|Cash and cash
  equivalents                                                                              |  | $                     | 1,924  |                     | $ | 1,051  |  
|Investment securities                                                                                    |  |                       | 1,903  |                     |   | 2,996  |  
|Investment
  securities restricted                                                                       |  |                       | 1,107  |                     |   |       |  
|Cardmember
  receivables, less reserves:                                                                 |  |                       |        |                     |   |        |  
|2006, $695;
  2005, $671                                                                                 |  |                       | 24,433 |                     |   | 23,750 |  
|Cardmember
  loans, less reserves:                                                                       |  |                       |        |                     |   |        |  
|2006, $9; 2005,
  $15                                                                                    |  |                       | 317    |                     |   | 554    |  
|Loans and
  deposits with affiliates                                                                     |  |                       | 9,336  |                     |   | 8,254  |  
|Deferred charges
  and other assets                                                                      |  |                       | 403    |                     |   | 764    |  
|                                                                                                         |  |                       |        |                     |   |        |  
|Total assets                                                                                             |  | $                     | 39,423 |                     | $ | 37,369 |  
|                                                                                                         |  |                       |        |                     |   |        |  
|                                                                                                         |  |                       |        |                     |   |        |  
|Liabilities
  and Shareholders Equity                                                                   |  |                       |        |                     |   |        |  
|                                                                                                         |  |                       |        |                     |   |        |  
|Short-term debt                                                                                          |  | $                     | 7,150  |                     | $ | 7,939  |  
|Short-term debt
  with affiliates                                                                        |  |                       | 8,266  |                     |   | 8,043  |  
|Current portion
  of long-term debt                                                                      |  |                       | 2,937  |                     |   | 2,300  |  
|Long-term debt                                                                                           |  |                       | 17,167 |                     |   | 14,629 |  
|                                                                                                         |  |                       |        |                     |   |        |  
|Total debt                                                                                               |  |                       | 35,520 |                     |   | 32,911 |  
|Due to
  affiliates                                                                                      |  |                       | 93     |                     |   | 1,021  |  
|Accrued interest
  and other liabilities                                                                 |  |                       | 264    |                     |   | 166    |  
|                                                                                                         |  |                       |        |                     |   |        |  
|Total
  liabilities                                                                                      |  |                       | 35,877 |                     |   | 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                                                                                      |  |                       | 3,333  |                     |   | 3,080  |  
|Accumulated
  other comprehensive income (loss):                                                         |  |                       |        |                     |   |        |  
|Net unrealized
  securities gains (losses), net of tax                                                   |  |                       | 6      |                     |   | (16    | )
|Net unrealized
  derivatives gains, net of tax                                                           |  |                       | 25     |                     |   | 57     |  
|Foreign currency
  translation adjustments                                                               |  |                       | 20     |                     |   | (12    | )
|                                                                                                         |  |                       |        |                     |   |        |  
|Total
  accumulated other comprehensive income                                                           |  |                       | 51     |                     |   | 29     |  
|                                                                                                         |  |                       |        |                     |   |        |  
|Total
  shareholders equity                                                                             |  |                       | 3,546  |                     |   | 3,271  |  
|                                                                                                         |  |                       |        |                     |   |        |  
|Total
  liabilities and shareholders equity                                                             |  | $                     | 39,423 |                     | $ | 37,369 |  
|                                                                                                         |  |                       |        |                     |   |        |  

See Notes to Consolidated FinancialStatements.

- 4 -

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AMERICAN EXPRESS CREDIT CORPORATION

CONSOLIDATED
STATEMENTS OF CASH FLOWS(Millions)
(Unaudited)

|                                                                                         |  |                                   |        |      |   |        |  
|---------------------------------------------------------------------------------------- |  | --------------------------------- | ------ | ---- | - | ------ | -
|                                                                                         |  | Nine Months Ended
  September 30, |       
|                                                                                         |  | 2006                              |        | 2005 |  
|                                                                                         |  |                                   |        |      |  
|Cash
  Flows from Operating Activities                                                   |  |                                   |        |      |   |        |  
|Net income                                                                               |  | $                                 | 453    |      | $ | 291    |  
|Adjustments to
  reconcile net income to net cash provided by operating activities:      |  |                                   |        |      |   |        |  
|Provision for
  losses                                                                   |  |                                   | 513    |      |   | 550    |  
|Amortization and
  other                                                                 |  |                                   | 7      |      |   | 11     |  
|Deferred tax
  assets                                                                    |  |                                   | 7      |      |   | 27     |  
|Changes in
  operating assets and liabilities:                                           |  |                                   |        |      |   |        |  
|Due to
  affiliates                                                                      |  |                                   | 17     |      |   | 26     |  
|Other operating
  assets and liabilities                                                 |  |                                   | 361    |      |   | (71    | )
|                                                                                         |  |                                   |        |      |   |        |  
|Net cash provided by operating activities                                                |  |                                   | 1,358  |      |   | 834    |  
|                                                                                         |  |                                   |        |      |   |        |  
|Cash Flows from
Investing Activities                                                     |  |                                   |        |      |   |        |  
|Net increase in
  cardmember receivables and loans                                       |  |                                   | (958   | )    |   | (759   | )
|Purchase of
  investments                                                                |  |                                   | (2,404 | )    |   |       |  
|Maturities of
  investments                                                              |  |                                   | 2,419  |      |   | 179    |  
|Net increase in
  loans and deposits with affiliates                                     |  |                                   | (656   | )    |   | (350   | )
|Net decrease in
  due to affiliates                                                      |  |                                   | (944   | )    |   | (859   | )
|                                                                                         |  |                                   |        |      |   |        |  
|Net cash used in investing activities                                                    |  |                                   | (2,543 | )    |   | (1,789 | )
|                                                                                         |  |                                   |        |      |   |        |  
|Cash Flows from
Financing Activities                                                     |  |                                   |        |      |   |        |  
|Net increase in
  short-term debt with affiliates with maturities of ninety days or less |  |                                   | 222    |      |   | 2,681  |  
|Net decrease in
  short-term debt with maturities of ninety days or less                 |  |                                   | (1,333 | )    |   | (351   | )
|Issuance of debt                                                                         |  |                                   | 9,551  |      |   | 1,690  |  
|Redemption of
  debt                                                                     |  |                                   | (6,182 | )    |   | (5,030 | )
|Dividends paid                                                                           |  |                                   | (200   | )    |   |       |  
|                                                                                         |  |                                   |        |      |   |        |  
|Net cash provided by (used in) financing activities                                      |  |                                   | 2,058  |      |   | (1,010 | )
|                                                                                         |  |                                   |        |      |   |        |  
|Net increase
  (decrease) in cash and cash equivalents                                   |  |                                   | 873    |      |   | (1,965 | )
|Cash and cash
  equivalents at beginning of period                                       |  |                                   | 1,051  |      |   | 3,802  |  
|                                                                                         |  |                                   |        |      |   |        |  
|Cash and cash equivalents at end of period                                               |  | $                                 | 1,924  |      | $ | 1,837  |  
|                                                                                         |  |                                   |        |      |   |        |  

See
Notes to Consolidated Financial Statements.

-
5 -

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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
  subsidiary 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | In September
  2006, the Financial Accounting Standards Board (FASB) issued Statement of
  Financial Accounting Standards (SFAS) No. 158, Employers Accounting for
  Defined Benefit Pension and Other Postretirement Plans - an amendment of the
  FASB Statements No. 87, 88, 106, and 132(R) (SFAS No. 158), which requires
  the funded status of pension and other postretirement plans to be recorded on
  the balance sheet as of December 31, 2006, with a corresponding offset, net
  of tax effects, recorded in accumulated other comprehensive income (loss)
  within shareholders equity. Effective for years ending after December 15,
  2008, the measurement date for the benefit obligation and plan assets is
  required to align with a companys fiscal year end.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | As Credco
  participates in a multi-employer plan and recognizes the cost of pension
  expense based on contributions into the plan, the adoption of the provisions
  included in SFAS No. 158 is not expected to have any impact on Credcos
  Consolidated Balance Sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | SFAS No.
  155, Accounting for Certain Hybrid Financial Instruments  an amendment of
  FASB Statement No. 133 and 140 (SFAS No. 155), ends the temporary exemption
  of beneficial interests in securitized assets from the bifurcation
  requirements of SFAS No. 133, Accounting for Derivative Instruments and
  Hedging Activities. SFAS No. 155 permits fair value remeasurement of any
  hybrid financial instrument that contains an embedded derivative that
  otherwise would require bifurcation. Remeasurements of these hybrid financial
  instruments and bifurcated derivatives will be recorded in income after the
  adoption of this new standard. SFAS No. 155 applies to all financial
  instruments acquired or issued after December 31, 2006. Credco does not
  expect any impact to its Consolidated Financial Statements.                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | SFAS No.
  156, Accounting for Servicing of Financial Assets  an amendment of FASB
  Statement No. 140 (SFAS No. 156), requires all separately recognized
  servicing assets and servicing liabilities to be initially measured at fair
  value, if practicable. Subsequent accounting may be elected under either the
  amortization method, which systematically amortizes the servicing asset or
  liability to income, or the fair value measurement method, which remeasures
  the servicing asset or liability at fair value with the changes recorded in
  income. Election of the fair value method is made on a class-by-class basis
  for each separately recognized servicing asset and liability. SFAS No. 156
  applies to all financial instruments acquired or issued after December 31, 2006.
  Credco does not expect any impact to its Consolidated Financial Statements.                                                                                                                                                                                                                                                                                                                                  

- 6 -

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AMERICAN EXPRESS CREDIT CORPORATION

|   |                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | The FASB has
  also recently issued the following accounting standards, which are effective
  after December 31, 2006. Credco is currently evaluating the impact of these
  recently issued accounting standards on Credcos Consolidated Financial
  Statements:
|   |                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                  | FASB
  Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48),
  is an interpretation that clarifies the accounting for tax positions
  accounted for under FASB Statement No. 109, Accounting for Income Taxes.
  FIN 48 prescribes a recognition threshold and measurement attribute for the
  financial statement recognition and measurement of benefits associated with
  tax positions taken or expected to be taken in a tax return. For those
  benefits to be recognized, a tax position must be more-likely-than-not to be
  sustained upon examination by taxing authorities. The amount recognized is
  measured as the largest amount of benefit that is greater than 50 percent
  likely of being realized upon ultimate settlement. FIN 48 is applicable to
  all tax positions as of January 1, 2007. The initial effect of adoption will
  be recorded in income taxes payable (in other liabilities) with an offsetting
  adjustment to retained earnings.
|   |                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                  | SFAS No.
  157, Fair Value Measurements (SFAS No. 157), establishes a framework for
  measuring fair value and applies broadly to financial and non-financial
  assets and liabilities measured at fair value under existing authoritative
  accounting pronouncements. SFAS No. 157 establishes a fair value hierarchy
  that prioritizes inputs to valuation techniques used for financial
  instruments without active markets, and for non-financial assets and
  liabilities. SFAS No. 157 also expands disclosure requirements regarding
  methods used to measure fair value and the effects on earnings. SFAS No. 157
  is effective as of the first quarter of 2008; earlier adoption is encouraged
  although Credco currently does not intend to adopt early.                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | Investment Securities                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                  
|   | The
  following is a summary of investment securities at September 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 government agency securities              |  |      | 1,895 |                            |   | 9                           |  |              | (1 | )    |   | 1,903                      |  |                             | 3,001 |              |   |  |  |   | (24 | ) |   | 2,977 | 
|U.S. Treasury and government agency securities -
restricted |  |      | 1,106 |                            |   | 3                           |  |              | (2 | )    |   | 1,107                      |  |                             |      |              |   |  |  |   |    |   |   |      | 
|                                                            |  |      |       |                            |   |                             |  |              |    |      |   |                            |  |                             |       |              |   |   |  |   |     |   |   |       | 
|Total                                                       |  | $    | 3,001 |                            | $ | 12                          |  | $            | (3 | )    | $ | 3,010                      |  | $                           | 3,020 |              | $ |  |  | $ | (24 | ) | $ | 2,996 | 
|                                                            |  |      |       |                            |   |                             |  |              |    |      |   |                            |  |                             |       |              |   |   |  |   |     |   |   |       | 

During the
nine months ended September 30, 2006, Credco purchased $2.4 billion of U.S.
Treasury and government agency securities. During the nine months ended
September 30, 2006, $19 million of Class C Notes and $2.4 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 nine months ended September 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 government
agency securities. Credco may only retain or sell these securities in the event
of a borrower default. Credcos loaned investment securities are considered
restricted and pledged assets and, therefore, have been reclassified as
investment securities restricted on the Consolidated Balance Sheet. 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

- 7 -

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AMERICAN EXPRESS CREDIT CORPORATION

|   |                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | transactions
  are recorded as interest income from investments. At September 30, 2006,
  approximately $1.1 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 nine months ended September 30, 2006 and 2005, were as follows:

| |                                                             |  |                                      |     |                                     |   |      |   |      |     |   |   |     |  
| | ----------------------------------------------------------- |  | ------------------------------------ | --- | ----------------------------------- | - | ---- | - | ---- | --- | - | - | --- | -
| |                                                             |  | Three
  Months Ended
  September 30, |     | Nine
  Months Ended
  September 30, |  
| |                                                             |  |                                      |     |                                     |  
| | (Millions)                                                  |  | 2006                                 |     | 2005                                |   | 2006 |   | 2005 |    
| |                                                             |  |                                      |     |                                     |   |      |   |      |    
| | Net income                                                  |  | $                                    | 160 |                                     | $ | 92   |   | $    | 453 |   | $ | 291 |  
| | Net
  unrealized securities gains, net of tax               |  |                                      | 26  |                                     |   | 2    |   |      | 22  |   |   | 3   |  
| | Net
  unrealized derivatives (losses) gains, net of tax     |  |                                      | (52 | )                                   |   | 31   |   |      | (32 | ) |   | 66  |  
| | Foreign
  currency translation adjustments (gains (losses)) |  |                                      | 17  |                                     |   | (3   | ) |      | 32  |   |   | (7  | )
| |                                                             |  |                                      |     |                                     |   |      |   |      |     |   |   |     |  
| | Total
  comprehensive income                                |  | $                                    | 151 |                                     | $ | 122  |   | $    | 475 |   | $ | 353 |  
| |                                                             |  |                                      |     |                                     |   |      |   |      |     |   |   |     |  

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 more information becomes available, a
  change in circumstance occurs or 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 Nine Months Ended September 30, 2006 and 2005

Revenues and Expenses

Credcos
consolidated net income rose 56 percent to $453 million for the nine months
ended September 30, 2006, as compared to the nine months ended September 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 33 percent or $394 million to $1.6 billion for the nine
months ended September 30, 2006, as compared to the nine months ended September
30, 2005. The year-over-year increase was primarily due to an increase in both
volume of receivables purchased and discount rates. Volume of receivables
purchased for the nine months ended September 30, 2006, was 10 percent higher
than the same period a year ago primarily due to an increase in cardmember
spending. Discount rates, which vary over time due to changes in market
interest rates or changes in the collectibility of cardmember receivables,
increased an average of approximately 13 basis points compared to the nine
months ended September 30, 2005.

Interest Income from Investments

Interest
income from investments increased 61 percent or $59 million to $155 million for
the nine months ended September 30, 2006, as compared to the nine months ended
September 30, 2005. The year-over-year increase is due to a higher interest
rate environment as well as the replacement of matured U.S. Treasury securities
primarily with higher yielding government agency securities. The average
interest rate on the total investment portfolio increased approximately 127
basis points for the nine months ended September 30, 2006, as compared to the
same nine month period a year ago.

Interest Income from Affiliates

Interest income from affiliates
increased 34 percent or $95 million for the nine months ended September 30,
2006, as compared to the nine months ended September 30, 2005. The
year-over-year increase is primarily due to an increase in the volume of loans
and deposits with affiliates. The average rate charged to affiliates during the
nine months ended September 30, 2006, was 28 basis points higher than the
average rate charged to affiliates in the same nine month period a year ago,
primarily due to the floating rate interest-bearing borrowings with affiliates.

- 9 -

---



AMERICAN EXPRESS CREDIT CORPORATION

Provision for Losses, Net of Recoveries

The provision for losses,
net of recoveries decreased 8 percent or $36 million for the nine months ended
September 30, 2006, as compared to the nine months ended September 30, 2005.
The year-over-year decrease, reflects a lower loss rate and improved results
from collection activities.

Interest Expense and Interest Expense to Affiliates

Interest expense and
interest expense to affiliates increased 34 percent and 82 percent, respectively,
for the nine months ended September 30, 2006, as compared to the same period a
year ago. The increase is primarily due to higher effective cost of funds and
higher debt funding levels. The average rate due to affiliates during the nine
months ended September 30, 2006, was 110 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 nine month period ended September 30, 2006, compared with the nine month
period ended September 30, 2005, (millions):

|                                                                         |  |   |     |  
|------------------------------------------------------------------------ |  | - | --- | -
|Discount revenue
  earned on purchased cardmember receivables and loans: |  |   |     |  
|Volume of
  receivables purchased                                        |  | $ | 122 |  
|Discount rates                                                           |  |   | 272 |  
|                                                                         |  |   |     |  
|Total                                                                    |  | $ | 394 |  
|                                                                         |  |   |     |  
|                                                                         |  |   |     |  
|Finance charge
  revenue:                                                |  |   |     |  
|Volume of loans
  purchased                                              |  | $ | (13 | )
|Interest rates                                                           |  |   | (4  | )
|                                                                         |  |   |     |  
|Total                                                                    |  | $ | (17 | )
|                                                                         |  |   |     |  
|                                                                         |  |   |     |  
|Interest income
  from investments:                                      |  |   |     |  
|Average investments
  outstanding                                        |  | $ | (6  | )
|Interest rates                                                           |  |   | 65  |  
|                                                                         |  |   |     |  
|Total                                                                    |  | $ | 59  |  
|                                                                         |  |   |     |  
|                                                                         |  |   |     |  
|Interest income
  from affiliates:                                       |  |   |     |  
|Average loans
  and deposits with affiliates                             |  | $ | 71  |  
|Interest rates                                                           |  |   | 24  |  
|                                                                         |  |   |     |  
|Total                                                                    |  | $ | 95  |  
|                                                                         |  |   |     |  
|                                                                         |  |   |     |  
|Provision for
  losses, net of recoveries:                               |  |   |     |  
|Volume of
  receivables purchased                                        |  | $ | 55  |  
|Provision rates
  and volume of recoveries                               |  |   | (91 | )
|                                                                         |  |   |     |  
|Total                                                                    |  | $ | (36 | )
|                                                                         |  |   |     |  
|                                                                        
|Interest expense:                                                        |  |   |     |  
|Average debt
  outstanding                                               |  | $ | 52  |  
|Interest rates                                                           |  |   | 188 |  
|                                                                         |  |   |     |  
|Total                                                                    |  | $ | 240 |  
|                                                                         |  |   |     |  
|                                                                         |  |   |     |  
|Interest expense to affiliates:                                          |  |   |     |  
|Average debt
  outstanding                                               |  | $ | 24  |  
|Interest rates                                                           |  |   | 82  |  
|                                                                         |  |   |     |  
|Total                                                                    |  | $ | 106 |  
|                                                                         |  |   |     |  

- 10 -

---



AMERICAN EXPRESS CREDIT CORPORATION

Income
Taxes

Credcos effective tax rate
for the nine month period ended September 30, 2006, was 14 percent compared
with 16 percent during the nine month period ended September 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.

Cardmember
Receivables

At September 30, 2006 and December 31, 2005, Credco
owned $25.1 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 September
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 nine months ended
September 30, 2006 and December 31, 2005, Credco purchased $207.6 billion and
$200.3 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 September 30,
2006 and December 31, 2005, CRC owned approximately $6.9 billion and $8.6
billion of participation interests purchased from RFC V, respectively.

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

|                                                                 |  |                         |        |                        |   |                         |   |   |        |  
|---------------------------------------------------------------- |  | ----------------------- | ------ | ---------------------- | - | ----------------------- | - | - | ------ | -
|As of and
  for nine months ended (Millions, except percentages) |  | September
  30, 
  2006 |        | December
  31, 
  2005 |   | September
  30, 
  2005 |  
|                                                                 |  |                         |        |                        |   |                         |  
|Total cardmember
  receivables                                   |  | $                       | 25,128 |                        | $ | 24,421                  |   | $ | 22,186 |  
|90 days past due
  as a % of total                               |  |                         | 2.6    | %                      |   | 1.7                     | % |   | 1.9    | %
|Loss reserves                                                    |  | $                       | 695    |                        | $ | 671                     |   | $ | 617    |  
|as a % of
  receivables                                          |  |                         | 2.8    | %                      |   | 2.7                     | % |   | 2.8    | %
|as a % of 90 days
  past due                                     |  |                         | 107    | %                      |   | 159                     | % |   | 150    | %
|Write-offs, net
  of recoveries                                  |  | $                       | 374    |                        | $ | 460                     |   | $ | 400    |  
|Net write-off
  rate (1)                                         |  |                         | 0.18   | %                      |   | 0.23                    | % |   | 0.21   | %
|Average life of
  cardmember receivables (in days) (2)           |  |                         | 32     |                        |   | 32                      |   |   | 32     |  
|                                                                 |  |                         |        |                        |   |                         |   |   |        |  

|    |                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 $707 million from December 31, 2005,
as a result of higher corporate and small business cardmember receivables
purchased during the nine months ended September 30, 2006. The cardmember

- 11 -

---



AMERICAN EXPRESS CREDIT CORPORATION

receivables  purchased  for the nine  months  ended  September  30,  2006,  increased  approximately  10  percent  from the  cardmember
receivables purchased during the nine months ended September 30, 2005, due to overall business growth.

Cardmember Loans

At September 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 Credco at September 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 nine months ended September 30, 2006
and December 31, 2005, Credco purchased $888 million and $941 million of
cardmember loans, respectively.

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

| |                                                                  |  |                      |   |                     |   |                      |  |   |      |   |  |  |   |      |   | 
| | ---------------------------------------------------------------- |  | -------------------- | - | ------------------- | - | -------------------- |  | - | ---- | - |  |  | - | ---- | - | 
| | As of and for nine months ended (Millions, except
  percentages) |  | September 30,
  2006 |   | December 31,
  2005 |   | September 30,
  2005 | 
| |                                                                  |  |                      |   |                     |   |                      | 
| | Total cardmember loans                                           |  |                      | $ | 326                 |   |                      |  | $ | 569  |   |  |  | $ | 558  |   | 
| | Past due cardmember loans as a % of total:                       |  |                      |   |                     |   |                      |  |   |      |   |  |  |   |      |   | 
| | 30-89 days                                                       |  |                      |   | 5.7                 | % |                      |  |   | 4.9  | % |  |  |   | 5.0  | % | 
| | 90+ days                                                         |  |                      |   | 2.2                 | % |                      |  |   | 1.4  | % |  |  |   | 1.5  | % | 
| | Loss reserves                                                    |  |                      | $ | 9                   |   |                      |  | $ | 15   |   |  |  | $ | 18   |   | 
| | as a % of cardmember loans                                       |  |                      |   | 2.7                 | % |                      |  |   | 2.6  | % |  |  |   | 3.3  | % | 
| | as a % of past due                                               |  |                      |   | 35                  | % |                      |  |   | 41   | % |  |  |   | 51   | % | 
| | Write-offs, net of recoveries                                    |  |                      | $ | 6                   |   |                      |  | $ | 14   |   |  |  | $ | 17   |   | 
| | Net write-off rate (1)                                           |  |                      |   | 1.94                | % |                      |  |   | 3.33 | % |  |  |   | 3.80 | % | 
| |                                                                  |  |                      |   |                     |   |                      |  |   |      |   |  |  |   |      |   | 

|    |                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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
$243 million from December 31, 2005 and $232 million from September 30, 2005,
due primarily to the sale of certain Hong Kong and New Zealand loan portfolios,
as well as a decline in lending 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:

| |                              |  |                       |   |                       |   |  |  |   |      |   |  |  | 
| | ---------------------------- |  | --------------------- | - | --------------------- | - |  |  | - | ---- | - |  |  | 
| | Nine months ended (Millions) |  | September 30, 
  2006 |   | September 30, 
  2005 |   |  | 
| |                              |  |                       |   |                       |   |  | 
| | Balance, beginning of period |  |                       | $ | 686                   |   |  |  | $ | 610  |   |  |  | 
| | Provision for losses         |  |                       |   | 513                   |   |  |  |   | 550  |   |  |  | 
| | Accounts written-off         |  |                       |   | (497                  | ) |  |  |   | (534 | ) |  |  | 
| | Other                        |  |                       |   | 2                     |   |  |  |   | 9    |   |  |  | 
| |                              |  |                       |   |                       |   |  |  |   |      |   |  |  | 
| | Balance, end of period       |  |                       | $ | 704                   |   |  |  | $ | 635  |   |  |  | 
| |                              |  |                       |   |                       |   |  |  |   |      |   |  |  | 

- 12 -

---



AMERICAN EXPRESS CREDIT CORPORATION

Loans and Deposits with Affiliates

Components of
loans and deposits with affiliates were as follows:

|                                           |  |                      |       |                     |   |                      |  |   |       | 
|------------------------------------------ |  | -------------------- | ----- | ------------------- | - | -------------------- |  | - | ----- | 
|(Millions)                                 |  | September 30,
  2006 |       | December 31,
  2005 |   | September 30,
  2005 | 
|                                          
|TRS Parent                                 |  | $                    | 531   |                     | $ | 750                  |  | $ |      | 
|TRS
  Subsidiaries:                        |  |                      |       |                     |   |                      |  |   |       | 
|American
  Express Services Europe Limited |  |                      | 3,189 |                     |   | 2,799                |  |   | 2,799 | 
|American
  Express Australia Limited       |  |                      | 3,252 |                     |   | 2,489                |  |   | 2,413 | 
|Amex Bank of
  Canada                      |  |                      | 2,209 |                     |   | 1,797                |  |   | 1,760 | 
|American
  Express International, Inc.     |  |                      | 155   |                     |   | 419                  |  |   | 205   | 
|                                          
|Total                                      |  | $                    | 9,336 |                     | $ | 8,254                |  | $ | 7,177 | 
|                                          

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
$9.3 billion outstanding as of September 30, 2006, $6.4 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 5.7 percent and 5.3 percent for the period ended September 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 September 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
nine months ended September 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
September 30, 2006 and December 31, 2005, Credco had $7.0 billion and $7.7
billion of commercial paper outstanding, respectively. Average commercial paper
outstanding was $8.3 billion and $8.4 billion for the nine months ended
September 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 $5.2 billion at September 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 202 percent at September 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 September 30, 2006 and December
31, 2005, Credco had an aggregate of $11.2 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 September 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). During the second quarter of
2006, Credco filed a shelf registration statement with the SEC for an
unspecified amount of debt securities to be issued from time to time. At
September 30, 2006, Credco had $12.2 billion

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AMERICAN EXPRESS CREDIT CORPORATION

of debt
securities outstanding, issued under SEC registration statements. On October
30, 2006, Credco issued $1.0 billion of medium-term notes under this program. Additionally, on November 9, 2006,
Credco issued $600 million of medium-term notes under this program.

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 U.S., of debt instruments to be listed on the Luxembourg Stock
Exchange. As of September 30, 2006, the maximum aggregate principal amount of
debt instruments outstanding at any one time under the program may not exceed
$10.0 billion. At September 30, 2006, $4.1 billion was outstanding under this
program, including $1.3 billion issued by TRS. On November 1, 2006, Credco
issued approximately $300 million of medium-term notes under this program.

During the
nine months ended September 30, 2006, American Express Canada Credit
Corporation, a wholly-owned subsidiary of Credco, issued a total of
approximately $1.3 billion of fixed and floating medium-term notes from its
$3.0 billion Canadian shelf registration statement. All notes issued under this
shelf registration are guaranteed by Credco. At September 30, 2006,
approximately $0.9 billion was available for issuance and $2.1
billion of total debt securities is outstanding under this program.

Credco paid
cash dividends of $200 million to TRS during the nine months ended September
30, 2006. On November 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 September 30, 2006, Credco held $3.0 billion in U.S.
Treasury and government 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
September 30, 2006, approximately $1.1 billion of investment securities were
loaned under these agreements.

Bank Credit Facilities

At September
30, 2006, Credco could have borrowed a maximum amount of $10.7 billion
(including amounts outstanding) under committed bank credit facilities, with a
commensurate maximum $1.2 billion reduction in the amount available to American
Express. These facilities expire as follows (billions): 2009, $3.2; 2010, $6.6;
and 2011, $0.9. As of September 30, 2006, Credco had outstanding borrowings of
$3.0 billion under these bank credit facilities related to the Australian
credit facility.

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 1.45 for the nine months ended September 30, 2006. The ratio of earnings to
fixed charges for American Express for the nine months ended September 30, 2006
was 2.93.

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,

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AMERICAN EXPRESS CREDIT CORPORATION

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 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                                                     
| |   |                                                                                                                                                    
| |  | 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. CONTROLS 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.

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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.

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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: November 13, 2006 |  | By | /s/ Christopher S. Forno                     
|                        |  |    |                                              
|                        |  |    | Christopher S. Forno                         
|                        |  |    | President and
  Chief Executive Officer      
|                        |  |    |                                              
|DATE: November 13, 2006 |  | By | /s/ Susanne L. Miller                        
|                        |  |    |                                              
|                        |  |    | Susanne L.
  Miller                          
|                        |  |    | Vice President
  and Chief Accounting Officer
|                        |  |    |                                              

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AMERICAN EXPRESS CREDIT CORPORATION

EXHIBIT INDEX

Pursuant to Item 601 of Regulation S-K

|             |  |                                                                                                                                                                               |             |                                  |  |          
|------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | -------------------------------- |  | ---------
|             |  |                                                                                                                                                                               | Description |                                  |  | How Filed
|             |  |                                                                                                                                                                               |             |                                  |  |          
|             |  |                                                                                                                                                                               |             |                                 
|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

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