Affluent Americans are starting to spend more and pay back their debt on time. At least, that is what American Express' (AXP) fourth quarter results seem to indicate. "We ended the year on a positive note with card member spending up 8% and credit indicators showing further signs of improvement," said Kenneth I. Chenault, CEO of Amex in a statement.

The credit card provider's net income soared 198% to $716 million, or 60 cents a share, in the fourth quarter, from $240 million in the same period of 2008. The earnings handily beat Thomson Reuters' polled analysts' expectations of 57 cents a share.

Amex customers are generally more affluent and tend to have higher spending power than its competitors which has generally shielded the company during economic downturns. However, during the recent recession, Amex's customers defaulted heavily, leading to large losses at the company.

But, the company is now signaling that things appear to be turning. Amex expects credit losses to slow in the coming months and accordingly reduced loan-loss provisions by 47% to $748 million, down from $1.4 billion a year ago.

The number of loans that were written off in the U.S. fell to 1.9% of total loans at the end of the fourth quarter, compared to 3.2% in the third quarter. And the number of customers who were late paying their credit card bills by 30 days or more also declined to 1.8% of total credit outstanding, compared to 2.2% at the end of the third quarter and 3.7% at the end of 2008.

Scott Valentin, an analyst at Friedman, Billings, Ramsey, believes that "2010 will mark the beginning of a slow healing process for the consumer... spending below their means, and saving more." Valentin says that signs that unemployment claims are declining recently should bode well for the credit card industry.

Despite these positive signs, Chenault expects the economic recovery to be modest. "We still face the challenge of high unemployment levels, depressed real estate values, and shrunken household balance sheets," he said.

Accordingly, the company is expanding into new businesses. Earlier this month, for instance, Amex acquired Revolution Money, a new payments platform for companies for $300 million.