Vision Credit Education, Inc.

Not to be outdone, American Express has begun raising some of its interest rates and fees as an attempt to counteract the pressure of increased defaults. This is consistent with the actions of other major credit card issuers. The result is cardholders may see higher rates and an increase in their minimum payment.

Purchases Rate Increasing

The standard APR for purchases is increasing as a way to boost the bottom line. This represents the largest potential gains for revenue, as well as the biggest increase in costs for most cardholders.

The default rate is also going up. This is a penalty rate that is charged if you give the card issuer a reason to raise your rate. This penalty may be assessed for a late payment or by exceeding your credit limit.

The cost of cash advances is also going up. You should also expect that the amount of your credit limit available for cash advances to be less than you could withdraw in years past.

Fees Increasing

Penalty fees have gone up in recent years. We decline to list exact late fee amounts because these frequently change industry-wide. Whereas most card issuers charged $25 - $29 as a late fee just a few years ago, these fees have increased to $29 - $39 recently. Even $45 is no longer out of the question.

Late fees charged by American Express are similar to those charged by other major card issuers. All of these late fees and over-the-limit fees have increased in a relatively short period of time.

In addition to late and over-the-limit, American Express is raising its foreign transaction conversion fee from 2% to 2.7%. This is still below the standard 3% charged by most other card issuers. This affects most people only while traveling internationally.

What to Do

The best way to protect yourself is to avoid overuse of your credit card accounts and repay the balances as quickly as possible. This may be harder now if your rate has increased. This will cause your monthly payment to increase without any additional amount going toward repaying the principal balance.

If you are juggling several credit card accounts, then you will likely notice that American Express is not the only card issuer that is raising rates. Indeed, you could see your credit card payments increase by 20-50% as a result of the announced increases, depending on which credit cards you possess.

Struggling to repay debt can cause conflict in your daily life. It can endanger your net worth and your credit rating. It can strip away your wealth, leaving you with little to retire on.

If you are having trouble being able to afford your American Express and other card payments, then you might want to consider credit counseling. A nonprofit credit counseling organization that serves you might be able to take the sting out of high interest and high payments.

If your only account is American Express, and you have experienced a recent job loss or emergency medical event, then you might wish to contact American Express directly and request a hardship. This short-term relief might provide a 6 month window to get caught up and pay down your balance.