American Express will raise the penalty for late payments to as much as $38. As Fred Katayama reports, the move comes after the CFPB raised the maximum penalty allowed.
Amid the holiday shopping rush, beware of late fees on your credit cards. Come January, American Express is hiking the penalty to $38 for those who making two late payments in six months. That's an increase of 2.7 percent. An Amex spokeswoman said the late fees are aimed at recapturing some of the business costs associated with not paying on time. The Wall Street Journal, which first reported the story, says AmEx is the first major issuer to act after the Consumer Financial Protection Bureau led by Richard Cordray moved to raise the maximum penalty allowed to $38 starting 2017. It says J.P. Morgan Chase, Citigroup, Bank of America, and Discover Financial are keeping their maximum late fee at $37. Some issuers like Discover have historically been lenient in assessing late fees to appeal to new customers. Susquehanna Financial analyst James Friedman said, "Other companies will keep fees (steady) as a marketing message or follow suit because they can." Credit card users have avoided billions of dollars in fees over the last few years after the CFPB moved to cap late fees in 2009, and the average late fee declined.