Part of being a responsible cardholder is understanding how card fees work. It’s important to read your Cardmember Agreement and file it in a safe place in case you need to refer to it. If you have any questions you can call your card issuer to clarify terms and conditions. Fees range from annual card membership fees to fees for certain optional transactions, such as balance transfers and cash advances. Other fees are levied whenever a cardholder violates the terms of a card agreement, which we’ll discuss later. Here are a few standard card fees:
Credit card companies may raise your interest rate, however, they must give you at least 45 days’ notice if they change any key terms of your consumer credit or charge card account, including what your interest rate or APR is. Additionally, if your Card's APR increases, we must tell you why, and the higher APR will apply only to transactions which occur after the notification. In this instance, we will also re-evaluate that rate increase every six months. If a reduction of your rate is indicated, we will reduce it within 45 days of completing our evaluation. If you are unhappy with what your new interest rate is, you may cancel your account, but this could have a negative impact on your credit score. You can also opt out of, or refuse to accept certain other term changes after you’ve been notified, but this may also lead to cancellation of your account. Instead, if possible, adjust your spending and payment habits to pay down each statement and avoid interest charges altogether. This will likely help improve your interest rate over time as well.
Different card products carry different terms, conditions and benefits — including different interest rates or Annual Percentage Rates (APR). Your individual credit profile, spending and repayment practices will influence what your interest rate is and it is like to fluctuate occasionally overtime. By paying your bills on time each month, you will continue to build a strong credit profile and will increase your ability to qualify for cards with lower APRs. You may also receive offers for cards with 0% APR for the first year – make sure you pay close attention to what your new interest rate will be after the introductory period is over.
American Express generally charges interest on purchases, cash advances and balance transfers beginning on the transaction date. If you pay your bill in full every month, you can avoid paying interest on purchases. However, you cannot avoid paying interest on cash advances and balance transfers. To calculate the interest on your account each month, American Express multiplies the Daily Periodic Rate by the number of days in the billing cycle, and then multiplies that total by the average of your daily balances. (The Daily Periodic Rate is determined by dividing your account’s APR by 365.) This is the “Average Daily Balance” method and results in daily compounding of interest. Refer to your Cardmember Agreement for a more detailed explanation of how we calculate interest on your account, including how we calculate daily balances.
TIP: Pay More Than The Minimum Payment
The larger the payment you make and the earlier in your billing period you make it, the lower your overall interest charges will be.
TIP: Always Pay On Time
Late payment will negatively affect your credit score and can lead to penalty fees.
If you do not pay your minimum credit card payment by the due date, you will be charged a late payment fee aligning to the smaller of the following amounts: $27 or your minimum payment due. For example, if the minimum payment due on your statement is $20, your late payment fee will not be more than $20. You must pay the minimum payment due, plus your late fee. You will also have to pay interest on any funds which remain unpaid from the previous billing period and your interest rate may increase if you continue to miss payments. If you make another late payment in the following six billing periods, your credit card late fee will be $38.
Charge cards require you to pay the entire balance in full at the end of a billing period. If you pay late, the fee will be $27. That fee will rise to $38 if you make another late payment in the following six billing periods. Additionally, if you miss two billing periods in a row, the late fee will be the greater of $38 or 2.99% of the past due amount.
If your monthly payment is returned unpaid by your bank (also known as "bouncing a check," your returned check fee will be $27. It will be $38 if your bank returns another payment from you in the following 6 billing periods. However, you will not be charged a returned payment fee that is greater than the minimum payment that was due before the date the check was returned. For example, if the minimum payment was $20, your returned payment fee will not be more than $20. You may be able to avoid this fee by carefully monitoring your bank account to ensure you have the funds to pay your bill, and by using online or automatic bill pay to pay your creditor quickly and directly, rather than waiting for a mailed check to clear.
There is no fee if you spend over your credit limit. American Express voluntarily eliminated overlimit fees in October 2009.