Credit card issuer American Express is gearing up to raise the fees it charges customers who are late with their payments.
According to a report by The Wall Street Journal, the federal government is moving to raise the limit on the amount credit card companies can charge on some late fees, and starting in January, American Express will be the first to respond. WSJ reported American Express could charge as much as $38 if customers are late more than once in a six-month time period. That raises American Express’ fees by $1. American Express already charges the highest fees.
WSJ also noted the raised fee puts American Express at the maximum amount allowed based on the Consumer Financial Protection Bureau’s guidelines. “There are business costs associated with not paying on time, and late fees are intended to recapture some of that cost,” American Express said in a statement to WSJ. It went on to say “a very small number” of its customers miss two payments during the course of six months.
The move on the part of American Express comes as it girds up for a fight with some of the nation’s retailers. Earlier in November, the Retail Litigation Center (RLC) and the National Retail Federation (NRF) called on the full 2nd U.S. Circuit Court of Appeals to take up a lawsuit over rules that prevent retailers from encouraging customers to use credit cards that don’t have as high of processing fees.
In a press release, RLC and NRF said the practice violates antitrust rules and makes it hard for merchants to get lower fees from the major credit card companies in the U.S. “While intense competition is a hallmark of the retail industry, it is largely absent from the credit card market, where fees continue to skyrocket,” said RLC President Deborah White in the press release. “American Express stifles competition by imposing rules that deny merchants the ability to incentivize customers to use lower cost cards and, by doing so, increases costs for all customers. Consumers should have visibility into the cost of transactions and the opportunity to take action to limit them if they so choose.”