American Express Change in Cardmember Terms, Rate Increases
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:
Important Notice:
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.”
Rebate
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.
Published on November 29th, 2008 - 11 Comments
Filed under: Credit Card News
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Amex *is* increasing interest on purchases. I made the same mistake in thinking until I turned over the page listing the other interest increases. They’re increasing purchases to 15.99%.
Comment by bonnie — Dec 2nd 2008 @ 3:54 amI got mine today, and I thought the same thing also until I read the other side.
They are raising my rate to 12.49% from 9.48%.
Too bad since 9.48% was a great rate.
Comment by Mickey — Dec 3rd 2008 @ 5:00 pmI checked my letter. There wasn’t anything on the back. Perhaps this differs from one cardholder to the next.
However, thanks for posting this letter.
It is good to know I’m not the only one.
I was searching the web to find out if anyone else had gotten this letter when I found this site.
Thanks again.
Comment by Mickey — Dec 3rd 2008 @ 5:03 pmMy letter says interest rates on “some” cards are raised
So maybe, I’m just one of the unlucky “some”.
Comment by Mickey — Dec 3rd 2008 @ 5:06 pmMy Amex card “only” increased APRs for Cash Adv., Late Payments, Defaults, and Foreign Currency Transactions.
I double-checked and saw nothing anywhere about my Purchase APR going up. So it could very well affect only certain cards/cardmembers.
Comment by Mooseboy — Dec 4th 2008 @ 5:31 pmI got my letter as well, and they’re going from 6.99 to 10.99%. I tried to call and opt-out, and they’re saying I’m stuck with it, even if I close the account.
Since I generally keep my credit balances on this account (because it’s so cheap!), it means another 400+ a year for me.
I’ve asked to have someone point out where my agreement says they can unilaterally increase my rates, even when I agree to close my account and they’ve said there is no opt-out. When pressed further, they said they’ll call me back.
I know they’re suffering financially, but this really isn’t fair!!
Comment by Jason — Dec 15th 2008 @ 10:04 amI carry a balance on their card and they’re increasing my rate from 9.99% to 12.99%. I don’t understand how they can legally make a unilateral change like this. My experience in the past has been a company will try to increase my rate, I opt out of the change in terms and as long as I continue to make payments in accordance with the original terms and don’t use the card any longer, they can’t change the interest rate. Am I wrong? Can they legally do this?
Comment by Kurt — Dec 17th 2008 @ 11:41 amApparantly they can. I’ve been on the phone several times with supervisors, to no avail.
The CEO of Amex testified earlier this year that they don’t raise interest rates just because they want more cash. They only raise them when the individual is late on payments. I guess they’ve thrown that out the window.
Congress is considering action to prevent this behaviour, you can write to -
House Financial Services Committee, Democratic Staff, 2129 Rayburn House Office Building, Washington, DC 20515 (Phone 202 225–4247)…
contact web page: http://financialservices.house.gov/contact.html
Also, if you want to write to Amex specifically and complain, you can do that at -
Ms Doria Camarava
American express
Aesc-ftl
777 american express way
Ft Lauderdale, FL, 33337
I will be writing. It seems like there is a lack of legal basis. I’m not an attorney, but I thought that contract changes required consent. Amex is unable to explain where my agreement says that they can make unilateral changes, but it does seem from researching it that it’s a common problem lately, among several credit issuers.
Comment by Jason — Dec 17th 2008 @ 2:44 pmI just received the letter regarding my interest rate increase along with a notice from Blue stating that my credit limit is going from 10K to $4400. This is totally reidiculous and unacceptable. In the statement they claim, among other things, that the decision was based the fact that my debt is too high with AMEX. That’s total BS because I just made a $4000 payment in May bringing my balance to $0.00, which is where it has been until the last month or so because of Christmas shopping. They also refer to my credit score from Experian, which again is bogus because my most recent Experian score is 721. I am soo sick and tired of these coporate sleezebags sticking it to us that are just trying to get by. I will be contacting AMEX tomorrow and if i do not get any satisfactory answers, I will be contacting an attorney. If someone has already initiated a class action lawsuit, PLEASE contact me.
Comment by Kendall — Dec 21st 2008 @ 9:47 pmI had a late payment on my Am Ex card last month(5 days late)…They charged me $ 38 late charge and increased my annual rate to $25.96%…an increase of almost 11% meaning about $1200 EXTRA a year…They are like doing business with the mob…I am going to transfer balances and do business with my credit union that has been 9.75% for the last 10 years…The difference on interest on these two similar balances between AmEx and Credit Union is an extra $182 per month…Just think if consumers had that extra money to buy basics or spend in our present economy…We wouldn’t need to be bailing out these finiancial institutions that cant’t manage themselves and it would be much easier to manage our finances
Comment by Gary Boroski — Dec 30th 2008 @ 11:22 am