American Express Card (Photo : Reuters)
Amex, American Express credit card is hiking its annual credit card interest rates for its one million members its first such move in more than five years. The credit card company have sent letters to the affected members already informing them that they pay less than cardholders having the same credit reports from other companies.
The Amex cardholder members will now pay a 2.5 percentage points increase on average, having 12.99 percentage points increase on its annual rates.
An American Express spokeswoman disclosed that for their members who have APRs below the market rates, their rate increase will not be as high as 12.99 percent but a lower level, it will all rely on each members' current APR, according to Business Insider.
The letter explained that the reason AMEX is increasing its rates is due to finding out that members from rival companies were being charged on a higher rates compared to them. However, it is normal for lenders to boost its rates without underlying change on their interest rate environment.
On the other aspect, Federal Reserve is being expected to start hiking the rates by year end, and the Central Bank's benchmark rates has been held zero for almost six years now. While the US economy is getting on its feet, the delinquency rate on credit cards have decreased dropping around 1.47 percent on the third quarter from 1.5 percent in the early months of 2013, CBS News reported.
The said increase will have an impact on some of their products and co-branded ones. The higher rates will affect only the smaller share of their customer base given that AMEX has over then 42 million US cards distributed to their customers.
To add more, early weeks of February AMEX disclosed that they are going to discontinue their partnership with Costco on March 31, 2016.
