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Credit Card Applications » News » Other » American Express Will Confiscate Loyalty Points for Late Payments

American Express Will Confiscate Loyalty Points for Late Payments

February 15, 2010
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This content is not provided by Citi. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the Citi.

A new policy drafted by American Express is expected to generate strong criticisms again from cardholders. The credit issuer recently sent out notices to its cardholders that it would confiscate loyalty points if they miss or are late on a payment. This current shift in policy affects American Express' co-brand partners like Delta Air, Hilton Hotels and Starwood Hotels. The program will take effect on January of next year.

In case, they would want to redeem their points, they would have to pay a reinstatement fee of $29. They would also have to pay for late charges and a penalty interest rate for future balances. The company explained that the policy was meant to encourage people to pay on time and be more responsible with their payments.

Critics argue that this is just a ploy of the credit issuer to come up with alternative revenue streams at the expense of cardholders. They added that missing payments is normal even for people who have sufficient means and could be caused by unforeseen circumstances, such as family emergencies or work related issues. They added that credit issuers are being unfair and inconsiderate. Even people who seemingly have a good record of making payments will be punished unnecessarily if he misses just one payment. People opposed to this measure find the new policy of American Express to be severe and harsh.

Credit card companies are expecting revenues to dip come February of next year when the credit card law takes into effect. One provision of the bill prohibits card issuers from imposing fee increases to cardholders who are not 60 days behind their payments. They are also compelled to issue notices way in advance to clients who are being targeted for fee increases.

Hence, credit card companies are coming up with innovative ways to increase their revenue to make up for perceived losses of income when the legislation would be fully implemented next year.

Credit card companies are quick to argue that the reason for their recent fee hikes was due to the weak economic conditions and not because of the Credit CARD bill.

Some major credit companies have also imposed similar a rewards policy to its cardholders. Citibank penalizes clients who miss a payment by freezing their loyalty points. In some instances cardholders are required to pay a reinstatement fee if they wish to get their reward points back.

JP Morgan Chase on the other hand imposes a less harsh rule when it comes to late payers. Loyalty points can only be redeemed once a cardholder is able to pay all of his debts in full.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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