American Express Raises Interest Rates In Effort To Be Just Like Other Credit Cards

The bad news continues to mount for American Express customers, as the company announced plans Wednesday to raise the annual interest rates on a number of consumer credit cards.

Bloomberg reports that more than a million cardholders will be affected by the rate increase to variable-rate products, including some proprietary and co-branded credit cards.

Under the plan, AmEx will increase interest rates by an average of 2.5 percentage points, bringing rates for new customers up to at least 12.99%. However, some longtime customers may continue to have lower rates.

The company says the hike – which applies to balance transfers and new purchases – is the result of a year-long review that purportedly found AmEx rates were well below competitor cards.

“We analyzed our credit-card portfolio last year and found customers that had APRs considerably lower than market rates, sometimes as low at 3.25%,” Elizabeth Crosta, a spokeswoman for the company says.

According to Bloomberg, the average rate on a variable credit card is currently 15.76%.

The company says the changes are a normal part of business, despite the fact that it hasn’t increased rates in nearly five years.

Crosta says the new rates are no different from what consumers would get if they applied for a comparable AmEx card today.

AmEx has suffered several substantial losses already in 2015.

In early February, the company confirmed a months-long rumor that it would end its exclusive relationship with Costco. The agreement between the two companies is slated to end in March 2016.

Shortly after that announcement, rumors began swirling that AmEx and JetBlue would end their decade-long relationship. At the time, sources claimed that JetBlue had reached a deal with Barclays Plc and MasterCard Inc. to take over its co-branded card business.

On top of the severed partnerships, AmEx was dealt a blow last week when a federal court ruled the company’s merchant agreements violate antitrust laws, resulting in higher costs for customers.

AmEx Said to Increase Rates for More Than 1 Million Cardholders [Bloomberg]