American Express Co., the largest credit-card company by purchases, may be cut by Standard & Poor’s on the prospect more borrowers will default.

The company was put on “CreditWatch” for a downgrade based on “escalating credit quality deterioration,” the ratings firm said today in a statement on New York-based American Express.

Chief Executive Officer Kenneth Chenault is shedding customers after efforts to expand backfired, and the company’s stock declined by more than two-thirds in 12 months. The firm is paying some cardholders $300 each to close accounts so the lender can reduce the risk of default as the recession deepens.

After “an aggressive growth strategy related to its credit-card loan portfolio during 2004- 2007, American Express has seen its asset quality deteriorate at a pace that exceeds median levels for the industry,” the ratings firm said.

Credit-card companies are facing higher charge-offs as the worst unemployment in a quarter century leaves more consumers unable to pay their bills.

The lender dropped 65 cents, or 4.6 percent, to $13.44 at 12:47 p.m. in New York Stock Exchange composite trading.