It looks like Citi isn’t the only credit card issuer raising their rates… American Express enclosed a letter in our latest bill detailing a bunch of changes to their Cardmember Agreement. While I’ve reproduced the entire letter below, here’s a quick summary:
- Cash advance APR is increasing to Prime + 17.99%
- Late payment APR is increasing to Prime + 14.99%
- Default APR is increasing to Prime + 23.99%
- Foreign transaction fee is increasing to 2.7%
Here’s the full text of the letter:
We are making several changes to our card products in response to the challenging environment and the increasing costs of doing business. These change include raising interest rates on some American Express cards and increasing the conversion rate for Charges made in forrign currencies. Please see below for details.
American Express offers a number of tools and resources designed to help you take advantage of all the benefits and features your Card offers, including the ability to make payments electronically or by phone free of charge, free alerts by e-mail or phone, and tips for using your Card. For more information, visit www.americanexpress.com.
Notice of Changes to Your Account
The terms of your Account are subject to change in accordance with the American Express Cardmember Agreement (”Agreement”) governing you Account (including increasing rates and fees, changing fixed rates to variable rates, and adding new terms). Any language in your Agreement contrary to or conflicting with terms amended herein is replace fully and completely. All terms of the Agreement not amended herein remain in full force and effect. These changes apply to existing balances and future balances on your Account. We urge you and any Additional Cardmembers on your Account to read this notice carefully and file it along with your Agreement in a safe place for future reference.
APR for Cash Advances
For billing periods that begin on or after December 2, 2008, the second sentence of subsection B of the Finance Charges section of your Agreement is replaced with the following:
“The APR for Cash Advances is the Prime Rate plus 17.99%.”
This is a variable rate. As of October 13, 2008, the Prime Rate plus 17.99% is an APR of 22.49% and a DPR of 0.0616%.
APR for Late Payment
For billing periods that begin on or after December 2, 2008, the first sentence of subsection C of the Finance Charges section of your Agreement is replaced with the following:
“Nothwithstanding the foregoing, unless a higher rate applies, the APR for all balances except Cash Advances will be equal to Prime plus 14.99% if during any Review Period any portion of any Minimum Amount Due is not credited to your Account by its Payment Due Date.”
This is a variable rate. As of October 13, 2008, the Prime Rate plus 14.99% is an APR of 19.49% and a DPR of 0.0534%.
APR for Default
For billing periods that begin on or after December 2, 2008, the last sentence of subsection D of the Finance Charge section of your Agreement is replaced with the following:
“The Default Rate is a DPR which correspond to an APR equal to Prime Rate plus 23.99%.”
This is a variable rate. As of October 13, 2008, the Prime Rate plus 23.99% is an APR of 28.49% and a DPR of 0.0781%.
Transactions Made in Foreign Currencies
Effective January 11, 2009, the bolded clause of the Transactions Made in Foreign Currencies section of your Agreement is replaced with the following:
“in each instance increased by 2.7%.”
Electronic Funds Transfer (EFT) Agreement
Effective December 2, 2008, we are adding a sentence to the last paragraph of the “In Case of Errors or Questions About Your Transactions” section of your EFT Agreement. The following is added after the third sentence:
“You authorize us or an agent to debit your Bank Account for this amount.”
Effective January 1, 2009, the first three sentences of the Rebate section of your Agreement are replace with the following:
“Everyday Purchases” are Eligible Purchases made at U.S. locations of the following categories of merchants, excluding warehouse clubes and superstores: supermarkets, drug stores, and stand-alone gas stations. To qualify as an Everyday Purchase, the merchant must submit the Charge using the appropriate industry code, merchant code, or product/service code established by us. If the merchant submits a Charge using a different code, the applicable Charge will not qualify as an Everyday Purchase. Merchants with multiple locations may submit Charges at different locations using different codes. This means that Charges at some locations will qualify as Everyday Purchases, but Charges at other locations of the same merchant will not.
The good news here is that they’re not increasing the APR associated with regular purchases, so… As long as you play by the rules and avoid cash advances, little will change for you. Still, it’s good to be aware of what they’re doing. The other bit of good news for us is that they still haven’t reduced our credit limit, though they’ve nicked a bunch of other people with credit limit reductions.