November 20, 2009
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News: AmEx; Pay Late, You Lose
American Express will be letting their co-branded credit card customers know that if they do not pay their bill on time, they can expect to be penalized. Not really a new concept, American Express's regular cards have carried the late penalty policy for some time now. Late credit card payments will continue to bring the $19 to $38 late penalty fee as well as an interest rate increase penalty that will be assessed on the balance of the account. American Express's current credit card interest rate penalty is 27 percent. Additionally, cardholders will lose all the points and miles that they earned during that month. If cardholders want to get the points back, they will need to pay a $29 reinstatement fee.
Cardholders of American Express's co-branded cards which include Delta Airlines, JetBlue Airlines, Hilton Hotels, and Starwood Hotels will be receiving a notice outlining the new late payment penalty program which is scheduled to begin in January 2010. The message is clear: pay your credit card bill on time or lose your points. There will be no exceptions to rule and all American Express credit card customers will be subject to the same policy. The big question is; how do other lenders handle this situation? Some have similar programs in place like JPMorgan Chase who will stop issuing miles on its co-branded United Airlines and Marriott International Inc. until the account is made current.
Citibank partners with American Airlines and points are not made available for redemption if the credit cardholder is late just one month. Citibank's regular card customers may also be subject to paying a reinstatement fee. At this time, American Airlines co-branded cards are not subject to a reinstatement fee. American Express hasn't indicated how much revenue they expect to generate from the new reinstatement fee policy; however, it is expected to offset a large portion of defaults and replace lost revenue resulting from new legislation.