August 26, 2009
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News: American Express Raising Rates
Americans and small business owners have felt the wrath of credit card companies over the past year. Many have complained that their credit limits have been unjustly slashed. Some credit card companies have received greater criticism than others. American Express is at the top of the list in customer complaints. A recent survey by Powerfeedback, a major market research firm with a global presence, indicated that 62% of the small business owner respondents said they would not recommend American Express to anyone. With the shutdown of Advanta's credit card business, many small business owners have little alternative but to deal with American Express. However, many cardholders are saying that the lender has gone too far.
According to a story in Crain's New York Business, an American Express spokesperson says that the company's decision to reduce a credit card account's credit limit is based on a combination of variables including spending and payment histories, income, and credit history scores. Furthermore, the company maintains that their effort to reduce financial risks is the driving force behind these decisions. If cutting their credit card limits hasn't hit home yet, American Express's newest slam against cardholders is sure to get them. The company will be raising interest rates from 19.9% to 23.9% on any account that has a missed payment on record during the past year.
American Express maintains that they are committed to contributing to the success of their small business accounts. Their new Open Forum is designed to provide small business credit card holders with the information, support, and tools required to connect with industry leaders and other business owners. The site offers articles, videos, and a discussion board to inform and inspire small business owners. All business owners have access to most of the Open Forum services; however, American Express card members do experience additional exclusive benefits. The Open Forum could be one way for the lender to sooth the financial pains of their small business owner card account holders, but is it enough to repair the damage and lack of customer appreciation that 62% of their account holders express? This could be a window of opportunity for a competitor.