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April 28, 2009

American Express “eliminating interest-free grace periods”

An American Express Costco Card customer, who says that she has never carried a balance, alleges that American Express is “eliminating interest-free grace periods”.  In other words, the company is now applying finance charges to fully-paid balances within the grace period.

The customer states:

“I have never carried a balance over from month to month; full payments have always reached AmEx days before the due date.  Since January, AmEx has been charging an Average Daily Balance (ADB) at the daily periodic rate for my monthly charges.  These charges show up under finance charges.”

I have not been able to verify this yet, and something doesn’t sound quite right with her story.  The assumption is that her contract expressly states that certain balances outstanding during grace periods are interest free.  According to American Express representatives, the Costco card, which is a revolving line of credit, does, in fact, offer an interest-free grace period for 20 days. If what this disgruntled customer says is true, her objections are warranted; there would be a breach in contract. 

Have any of you experienced this?  Do you have any insight on the matter?

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Upon returning from my wonderful honeymoon in Jamaica in October 2008, I received what I thought was an ordinary American Express bill, but to my surprise it was a disappointing letter informing me that my credit line was reduced by about 65% for a highly suspicious and discriminatory reason. Considering my excellent credit score and pristine payment history, it just didn’t make sense. However, what does make sense are the unfair and insidious policies that I have uncovered when asking why. It is time to change them.

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