AMEX Blue Raises Rates, Also On Past Balances, And Won't Let You Opt-Out
Starting Oct 1, AMEX Blue is raising rates on all customers, INCLUDING on OLD balances, AND they are telling customers that you can't just opt out and cancel the card (like normal). Turns out that opt-out we all took for granted was only by the credit card companies' good graces.
-Standard APR is going from fixed rate 11.99% to Prime Rate plus 11.99%. Rate as of Aug 1, 15.24% (this is applies to new purchases AND ALL BALANCES PREVIOUS)
-APR for Cash Advances will be 21.99% plus prime.
-APR for Late Payment will be 23.99% plus prime.
-Late fees for less than $250 will be $19, greater than $39.
Here's the AMEX letter:
Like all companies large and small, our pricing has to be responsive to the business and economic environment. As a result, we have found it necessary to increase rates and fees on some of our products. Below are the principal changes to your account:
o We are changing your APR on purchases from a fixed rate to a variable rate. (Prime Rate plus 11.99% = 15.24%)
o We are raising the APR on cash advances. (Prime Rate plus 21.99% = 25.24%)
o We are raising the APR on any balances that have a penalty rate. (Prime Rate plus 23.99% = 27.24%)
o We are increasing the late fee.
Reader Neil is miffed:
For a company whose stock price has doubled in the last six months and who has paid back its TARP money, this sure seems more like pure greed than any response to market conditions. Either that or they want to sneak some crap in before new regulations kick in. Anyway, since I have been a loyal customer for nine years, I think it may be time to do my own adjustment and bolt them. At least then their short-term shenanigans would result in them losing a long-term profitable customer.
So is Brian:
I have an AMEX Blue card and it's always been my go card because it had a fixed interest rate of 7.9% on all purchases; not the best but it beats most. Earlier this year I got a letter from AMEX stating that due to a "hard economic environment" they were raising everyone's interest rates by 3%. So my fixed 7.9% became my fixed 10.9%. It is no longer my go to card and I was looking into what my best options were to transfer and close out the account, but I was taking my sweet time about it. [Then] I just got a new letter in this week from AMEX... So in short, my AMEX Blue account went from a fixed 7.9% to a fixed 10.9% to a variable 15.24% this year, and at no time was I ever late on a payment or was ever assess a penalty. As you can imagine I'm no longer taking my time and weighing my options and I'm going to transfer my account this week.
Adam can deal with the rate hike, he just doesn't like they're tying his hands:
Just yesterday I got a notice in the mail stating they are raising my APR by 5% (applies to existing balance and new purchases) and was curious that no where on this notice does it mention the ability to opt-out. I did a Google search on this topic and was surprised to learn that the option to opt-out is a just privilege, one awarded by many credit card companies, but not American Express. A call and email to customer service confirmed this....I shouldn't have any problem financially with this rate hike, but the prospect of future changes and not having any options at all doesn't sit well with me.
The letter they sent also notifies customers that the card is dropping overlimit fees. As we previously reported, AMEX is dropping overlimit fees because it's too expensive to get everyone's permission for them, a requirement of the new CARD act. Tying the rate increase to the fees getting dropped is in line with the credit card companies moaning, "We will have to make up our ill-gotten gains somewhere!" in response to the consumer protections initiated by recent credit card reform.
PREVIOUSLY: AmEx, Discover Ditch Overlimit Fees
(Photo: www.samwilkinson.org)
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Comments:
Just throwing this out there - I have an AmEx Blue and they are not raising my purchase APR, everything else but not on purchases. My letter is carbon copy to what you posted but doesn't mention purchase APR. Also, they have a little line in there about how *surprise* they aren't going to charge you for going over your limit.
Gee thanks AmEx, you're really sticking your neck out for us.
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I think I just covered the information in about..oh..10 future posts.
FYI, I got the same letter re: my AMEX Clear card.
Anyway, you can moan about it as much as you want, but pretty much every credit card company has sent out letters like this -- it's not like you can take your business elsewhere. All you can do is work towards reducing your credit card debt to $0.
Yep, and they don't care if they lose customers over this. I called yesterday to cancel my card, hoping they would cancel the rate increase. I have an excellent credit rating, and have had one since I was 18, making it around 15 years, I pay my bill early, and I always pay more than the minimum amount due. I told them I thought the increase was unacceptable for a responsible customer, and a customer that is obviously not a risk. They didn't seem to care, so no more AMEX for me.
@pecan 3.14159265: Oh please, not even close.
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Thats more like it.
They don't care about losing customer's over this either. I called yesterday to cancel hoping they would reverse the increase, but no luck. I told them it was unacceptable for someone who has had a excellent credit rating from the time I was 18 (15+ years), and someone who pays their bill early. They said it wasn't just me that was receiving the increase, not that it makes it better.
Just got something like that in the mail too. Fortunately for them I am on a purchasing freeze.
I'm the one who sent the message about not liking how my hands have been tied. The thing that bothers me the most about this whole deal is that I really did like AmEx. My Blue card had a decent rate, a high limit, good perks and I've always received good service. Now it feels like one of those episodes of "Locked Up Abroad" on NatGeo where someone treats you well, throws a bit of money and perks your way, then leaves you in the middle of the airport with twenty pounds of weed in a suitcase that looks like it is full of weed with no option and no way out.
I just got this same bullshit as well. I only opened this card about 6 years ago now because it had a 7.9% fixed rate. I didn't bark a few months ago when they hiked it to 11.99% I just secretly vowed to never carry a balance (and I haven't) but now it just went up to 15.99% which is asinine. I have nearly a 900 credit score, make a very good income, haven't been out of work since I was 17 and have never missed a payment. I will no longer be using this card.
What do you mean by "they won't let you leave"?
Just pay off the card and cancel the sucker.
@valleyval: Well what's your current APR, if it's already 15.24% or higher then they probably wouldn't raise it.
I got that letter too, and it won't effect me in the least since I don't carry balances or pull cash advances on this account AND my payments are never late.
Matter of fact, I just got my Blue Cash annual cash back posted to my account and it's over $500 this year!
As a FORMER Amex Customer, I quit months ago when they raised my interest rate. Banks have teams of thinkers who's sole job it is to find ways around the law so no matter what laws there are, there will be a way to take advantage of the consumers. I have no problem with this because I'm just going to learn to use cash. Using cash means no more large purchases, less worries about spending more than I have, no worries about late payments, no worries about insane interest fees, no worries about unauthorized payments. Merchants will have less overhead, so they might lower prices because fewer people are using credit cards. I say ehhhhh!
I just got a similar letter about my Costco AmEx.
@acasto: Ditto I've used this card as my primary CC for about 6 years. I've charged and paid off more than it would cost to purchase a luxury sedan on this card.
Having done nothing wrong I feel like I'm being punished. I'd hate to cancel what was the best card I've ever had but I feel I need to now out of principal/spite.
Here's to hoping all affected follow Neil's advice and drop business with this company. Use your powers of choice as a consumer to hit them where it hurts most - in # of open accounts and $ in finance charges monthly.
I received this letter too. I called up and explained to them that they are by far my most expensive credit card (more than double my next highest card)and requested a rate reduction. They flat out refused. I informed them as of my next statement I will be paying down the card in full, and putting it in a draw. By doing so, it will cost AMEX to keep me as a cardholder. CC co's are required to hold cash on their balance sheet (albeit a fraction of the total amount of their commitment), which is a very real cost that will not be offset by transaction fees or interest payments. While 3 levels of customer service agreed that this will erode shareholder value (nice buzzword, huh?), were note able to adjust the rate.
Its just my small little stand. Hopefully others are doing the same (assuming they can).
@johnthrax: I'm in the same boat, I believe in their eyes we are in fact bad Amex customers because we don't carry a balance and pay late which is where they make their money. I don't think they mind losing us.
@valleyval: I received the same thing. My purchase APR is currently 7.24%. Not that it would really matter if they jacked it, since I don't carry a balance, but I guess it's at least nice that they left that one alone.
@Hooray4Zoidberg: I got the same letter, no raise in purchase APR, mine's currently at 13.24% with the Gold Delta AMEX, no letter yet on my Starwoods Business Open AMEX.
I too got a letter saying that rates on past due or cash advance/penalty rates are going up, but nothing about my actual rate going up as well.
My rate is at 10.24% as of right now. I'm assuming they're raising people's rates who carry a balance, I usually pay the card off every month, and have zero balance.
Hah! Cancelled last year, beat them to it.
Amex Blue customer here, got that letter too. Don't care, as we never carry a balance. As soon as they make the cashback program not worth my time, I'm gone. Until then, they can raise my rates, add fees for whatever the hell they want.
I have a limited amount of ire to give, and it's used up on things other than this. I mean, I can see why people are pissed, it's just too far down the list for me to spend any energy on it.
@Telekinesis123: It was totally a joke, but in every credit card thread all of these things appear. It's just how we express ourselves. With bitterness, anger, and just a little rage thrown in.
If you can't just 'opt out and cancel the card' then transfer or pay off your balance by October 1st. After that, cancel or only charge what you can pay in full when the statement comes.
I think AMEX is going to lose a lot of good customers with this...and it's well deserved.
@StanTheManDean: But the time it takes for some people to pay off the card means they'll be saddled with the new rates for a while before they get to no balance.
I got the same letter, and am one of the "never been late, never over limit, never a black mark against me" people.
Luckily, I'll have any balance on the card paid off before then.
I got two letters from Amex this week. This one about the Blue Cash card and another one offering me an "upgrade" to a Gold card with a $150 yearly fee because I'm so special. I ripped up both letters.
These rates don't matter if you pay your bill in full each month, right?
They can't take balance transfers out of a promotional rate that I paid for can they?
I sent this in on the 12th via the tips email... And I get no love?
Anyway, I am stuck with the hike since I used it to consolidate the debt that my ex-wife incurred while we were married and I still owe a large sum of money that I cannot pay off in a lump sum.
I have been a customer since blue was introduced, never had a late payment and only underpaid one bill by 5 dollars once 3 or 4 years ago due to an error in typing.
I used to love Amex, but after this fiasco I am going to dump as much money into paying it off and canceling as soon as humanly possible.
I also have an excellent credit rating.
@Hooray4Zoidberg: @Franklin Comes Alive!: Same here. Got the letter for my Costco Amex, but actually not my Amex Blue. I guess I'll expect it any day now.
I got the same letter, but they just told me they were raising my Cash Advance APR and Late Fee, I'll have to look again to see if they're raising the Penalty Rate APR.
Even though I pay off my balance every month, I'll still be checking my statements after Oct 1 to see how much has actually changed.
I don't understand this. What do you mean "opt out"? of course you can't say "I opt out of this rate increase", I would assume that would be a no-no. What other "opt out" is there? Just to pay it off and cancel, if you can't pay it off then you have problems and will be paying more interest. You can get a loan at a better rate (or a card with a better rate), transfer balance to that and cancel.
I got the letter, too. My APR had already been raised from 10.24% to 13.99%. A letter had been sent out a few months ago for me. I did get the second letter last week. It didn't mention promotional balance transfers (which I have one at 4.99%--will be paid off in 3 mos. Yay!)...Last time they sent me a letter, it said this rate would *not* be increased....I've not asked them about this new letter...*off to email them now...*
@pecan 3.14159265: You forgot these:
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@Telekinesis123: Ummm you must be new around here. Sarcasm and jokes...look them up.
My letter specifically says purchases and cash advances. The letter does not mention balance transfers. Only purchases and cash advances. I called and was told by AMEX that my balance transfer lifetime rate WOULD NOT BE CHANGED. Which is okay for me. I just won't use it anymore.
The Federal Reserve Board will clarify interim rules in February of next year which will require companies like AMEX to go back three years and undo rate increases for customers with arbitrary increases.
Please refer to the Federal Reserve Board website for details. It is written into the law this way.
So wait, Amex doesn't have that "materially adverse change" deal where you can't cancel if rates go way up?