Wednesday, February 02, 2011

Is this good for American Express?

Attached to my most recent American Express card bill were 11 pages explaining how my "charge" card works, the terms of the contract. They are "pleased to let you know that we've rewritten your Cardmember Agreement so that it's easier and simpler to use and easier to understand". What the pleased Amex folks don't also acknowledge is that it's also completely different.

My gold card as of now, I read, has a $35 late payment fee, a 27.54% APR penalty rate and a 15.24% rate for any revolving credit, which I have never signed up for and don't understand conceptually. In addition they inform me that in addition to normal interchange fees to the vendors, all foreign transactions have an additional 2.7% fee for me(old news) plus, and this is big one, "conversion charges for transactions made in a foreign currency". As described in the small print of part two of these eleven pages, "unless a particular rate is required by law, we will choose a conversion rate that is acceptable to us for that date...this rate may differ from the rates that are in effect on the date of your charge." Hmm, ok.

For thirty years I have viewed the American Express card as superior to others for several reasons. A primary one has been no late fees. If you missed a due date by a few days or a week so be it as long you didn't abuse the "privilege", to use one of Amex's key marketing words. So a late return from a trip, an emergency, an illness, or just a lapse in memory or the bill getting misplaced under something else on the desk, no agnst with American Express. No more.

I called the company and those people in their call center are well trained and they are not in India. As I explained that I did not want a credit card, did not want to be subject to late fees or APR's, the representative continued in various polite ways to say that nothing has changed. "We are a charge card, not a credit card". Me - "For thirty years I had one set of terms and maybe three or four times was late with a payment. That was a key feature. With the terms you have here I can go to Chase and get a free card so why would I pay you an annual fee?"

The rep continued to say nothing had changed. It was bizarre.

I did learn that with all of my awards points I am at least a hostage for awhile, because those points are considerable and if I cancel the card they all "immediately expire" according to the rep.

American Express at every chance for at least ten years has offered its customers, me, the "opportunity" to convert to a revolving credit program which they refer to as something like "extended protection", but it's the same thing. Now they finally just imposed it on all cardholders.

It will probably make them more money in the short run, almost certainly it will, but what does it do to the exclusivity of the brand longer term. This is a really stupid move if you ask me, and I'm looking at an Amex stock holding right now in two accounts and wondering what to do about them.


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