I usually don’t pay too much attention to mail from credit card companies because, being very careful with my credit, I have largely stayed out of trouble. Most of the time, I don’t even read the letters that come with account policy or agreement changes. They just don’t concern me since I always pay every bill in full and on time.
Then last week, I received two letters containing price change information from American Express (NYSE:AXP) for two cards I own: Costco TrueEarnings Card and Optima Platinum Card. Citing changes in the business and economic environment, AMEX says in the letters that it found it’s necessary to increase rates and fess on some of its products. Particularly, starting with the new bill cycle on October 1, 2009, Amex will raise APRs on purchases and cash advances and increase the late fee. Even though I don’t think these changes will affect how I use the cards (I never withdrew any cash using a credit card and was never late in making a payment), I decided to go through the letters carefully this time to see what will be changed, given how much talk there is about how credit card issuers are making changes to their policies when they still can.
Starting October 1, 2009, AMEX will change the standard APR for purchases to the Prime Rate plus 11.99%, which is 15.24% as of August 1. The APR for cash advances is increased to the Prime Rate plus 21.99%. Currently the APR for purchases on my cards is at 13.24%. The 2% increase actually isn’t too bad. However since I didn’t have any financial charges against me before, I thought I should be rewarded with a lowered APR for being a good customer, not a higher APR. As for the late fee, AMEX has decided to adopt fee structure that depends on the amount of balance instead of a flat fee. If the balance is below $250, the late fee will be $19; otherwise, the fee will be $39.
It’s not all bad news though. In the letter, AMEX also says it will eliminate the over-the-limit fee at the same time when the above price changes take effect.
At the end, AMEX didn’t forget to remind me that it’s important to keep my balance under my credit limit and pay my bills on time to avoid late fee.
Well, we all know that is obvious when handling credit cards. That’s what I have been doing for years and that's why I don’t really care about these price changes.