American Express Membership Rewards - EXSISTING 3.99%Life of Balance transfer. "Lifetime"just got a whole lot shorter!

:td:

Ok, So I have a AMEX BLUE with a 3.99 Life of Balance transfer balance.

It had NO transaction fee.

I owe about $20,000.

Minimum payment has been 2% of outstanding balance.

or about $400 a month.

Of course I have never used the card for a purchase.

I get this month's statement a few days ago.

On the envelope it says that "important information about your account is enclosed".

I read it.

There are some changes to Purchase protection which I did not pay careful attention to. After all I make no purchases on this particular Amex product. However me now thinks it will be all Amex cards.


Of more intrest to me is a potential change in minimum payment due.
the minimum payment on the PREEXSISING 20Kpossibly in doubling to 4%.
The ambiguity is disconserting. My language is same as in the Fat Wallet Link
http://www.fatwallet.com/forums/messageview.php?catid=52&threadid=763450&highlight_key=y&keyword1=life+of+balance

Can I "opt Out" or decline the new terms , by cuting the card in half and send a letter certified mail that I wish to pay off the balance in accordance with the original terms?

I dug out the original card member agreement.

Page 3, middle collum entitled "Changing this agreement/ assigning this agreement", seems to give AX the Unilaterial right to change terms on preexsisting balances even without a default. The only restriction is "subject to appliciable State law".

But the minimum payment on the PREEXSISING 20K in doubling to 4%.

Can I "opt Out" or decline the new terms , by cuting the card in half and send a letter certified mail that I wish to pay off the balance in accordance with the original terms?

They didn't change the rate, just the minimum payment, right? I'm not sure that you have much of a leg to stand on in terms of keeping whatever you want, but I'm sure that AX would be happy for you to pay it off and walk away. They aren't making all that much on the 3.99% "loan" that they gave you. It doesn't seem that there is any reason you can't just pay it all off now or next month still at the 3.99% rate, as long as you make all the minimum payments in the mean time.

well had I continued to use the card after the balance transfer and had a high intrest portion , would I have recieved this??

Of course this is a material change BTW.

I actually paid off a MBNA Merrill Lynch 1.9% and Citi 0% EARLY to take advantage of this Life of balance offer.

I'm not expecting to keep the account open AND deline the new terms.

The issue is what does the board think that would happen if I send such a letter?

\, but I'm sure that AX would be happy for you to pay it off and walk away. They aren't making all that much on the 3.99% "loan" that they gave you. .

Agreed.
Absolutely.
But I did not go to them and ask for these terms.

They came to me and offered it to me.

They were hoping that:

1-I used the card in addition to do the balane transfer AND/OR

2-Paid late , triggering a "default" intrest rate. AND/OR

3-Bounced a check trggering a "default" rate. AND/OR

4-Exceeded my credit line. AND/OR

5-Paid another Creditor late.

Well I did not off the above five.

I would expect this from Citi, Chase or B of A, but not Amex.
It reeks of predatary lending.

...had I continued to use the card after the balance transfer and had a high intrest portion , would I have recieved this?

Yes. See, for example,...

http://flyertalk.com/forum/showthread.php?t=738801

I imagine this applies to all USA issued personal American Express credit cards.

I think the thread title is misleading, since they are still charging you 3.99% interest.

wasn't the 4% minimum passed by the congress last year? Of course it didn't help that the credit card companies lobbied heavily for it.

It's the lenders who offered the deals who caused the lending crisis, not the borrowers. writetorich made a good move by taking advantage of the generous offer. ^

I've been hearing about changes in minimum payment calculations for the last year or so, got another notice from Chase recently too, but I haven't seen any actual changes in payments for some low rate life of balance amounts that I have. We'll see if any significant changes ever happen. I can deal if they do, but so far I've seen no indication this will apply to me.

I really don't see the big deal going from 2% to 4% min payments.
I think its for the bertter of society if min. payments go up.

It's the lenders who offered the deals who caused the lending crisis, not the borrowers. writetorich made a good move by taking advantage of the generous offer. ^

The borrowers are just as much to blame for not understanding what they are getting into. There is no such things as a free lunch with especially where credit is concerned.

I really don't see the big deal going from 2% to 4% min payments.
I think its for the bertter of society if min. payments go up.

Except, I rarely carry any balance except for these promo offers.

I think the thread title is misleading, since they are still charging you 3.99% interest.

"EXSISTING 3.99%Life of Balance transfer. "Lifetime"just got a whole lot shorter! "

My thread title never implied nor explicitedly stated that the 3.99 was changing.

My thread title referred only to the length of of the "lifetime" of the length that there would a balance.

wasn't the 4% minimum passed by the congress last year? Of course it didn't help that the credit card companies lobbied heavily for it.

The increase was done by the Fed which was worried that banks it regulates might not be able to collect on credit card debit due to the minimum payments being too low. The credit card companies strongly opposed the change as it would impact their interest income.

There is tons of info on this on the 'Net. Take a look, for example, at: http://www.bankrate.com/brm/news/debt/20050503a1.asp

In other words, Amex changed the minimum payment 'casue it had to.

The change was pushed for by consumer groups, who are primary concerned with people who get stuck in revolving credit doors and end up paying 300-400% on their debts. From what I've read the whole push to 2% pays started when B paper credit card companies figured out they could make a lot more money long term by lowering minimums. So this is more or less a return to what cards were in the 80's and 90's.

Some people of means may get caught in the cross fire. You should be able to tell Amex you don't accept the terms change. They would then convert you from a revolving account to an installment account. Although in that case I don't know if that would help. You might end up with an even bigger monthly payment.

"EXSISTING 3.99%Life of Balance transfer. "Lifetime"just got a whole lot shorter! "

My thread title never implied nor explicitedly stated that the 3.99 was changing.

My thread title referred only to the length of of the "lifetime" of the length that there would a balance.

Good point. You're right.

The change was pushed for by consumer groups

Suggests a touching faith in the power of consumer groups under the present administration. :)

That may have been a published rationale, but the real reason was that the regulators were afraid that consumers would be defaulting like mad in the next economic downturn, hurting the banks and perhaps requiring a government bailout, kinda like the S&Ls last time around.

Suggests a touching faith in the power of consumer groups under the present administration. :)

That may have been a published rationale, but the real reason was that the regulators were afraid that consumers would be defaulting like mad in the next economic downturn, hurting the banks and perhaps requiring a government bailout, kinda like the S&Ls last time around.

Whatever the reasons, it's for the better. Obviously most Americans don't know how to take care of their money -- their own worst enemies.

I really don't see the big deal going from 2% to 4% min payments.

Ignoring compounding interest, after two years, if you had the option of only paying 2% of your outstanding balance, you would still have 62% (.98 to the 24th power) of your original low-interest-rate loan outstanding. If that was changed to a 4% minimum payment instead, the principal balance would only be 38% (.96 to the 24th power) after two years. That is a huge difference. Perhaps that is good for people who don't know how to restrict their spending, but it is clearly not fair to someone like the OP who relied upon an unsolicited offer to move balances from two other cards.

Unless something has changed dramatically recently, I did not think credit card companies could change the T&C's of a promo interest rate. For instance, if you take out a 0% balance transfer rate for 15 months, I did not think that the cc companies could unilaterally change it to 3 months after they've suckered you in. I haven't tracked FW in the past few weeks. Is the consensus there that credit companies CAN now do this?

P.S. How do you use a caret symbol in this forum? When I put it in my computations above, I got "thumbs-up" symbols.

Click on the "Disable smilies in text" to use the ^ and :) without them getting parsed.

Anyway, if this is a Fed rule, you probably won't be able to decline the new terms.

I still find this strange. I just read through that Bankrate article. It's from over 2 years ago. It doesn't mention any timeframe. And again we have writeorich relating how the terms seem ambiguous about "may" increase the min payment. This seems to be how some changes in terms I got read as well. But the min payments have not actually changed.

So does anyone know if there's a firm timeframe, required by law, coming up? Or is it just a suggestion, and the credit companies have discretion in who they change?

I just double checked. Discover and Chase still at 2% for me. Citi is even lower.

Okay, here's the real deal on the regulation: it requires the minimum payment to cover all interest and fees plus at least 1% of the principal balance. And this went into effect at the beginning of 2006. Couple of sources:

http://www.cbsnews.com/stories/2006/01/06/earlyshow/contributors/raymartin/main1184663.shtml

http://www.creditorweb.com/articles/minimum-payments-on-credit-cards-will-soon-be-higher.html

http://www.consumeraffairs.com/news04/2005/occ_credit_card_minimum.html

For people who have balances at silly interest rates, I guess that could start to equal a fair amount of the balance. I guess that explains why my minimum payments haven't seen some big increase, since those cards I mentioned are at 0% (temp), 3.99% (until paid off) and 2.99% (until paid off). And that's why the Citi can still be lower than 2%. They're doing something like 1.25% plus the interest.

Anyway, this is just the regulation. All this means is that if Amex is changing the minimum payment terms, it's not because of any upcoming change in the law that I can find.

EDIT: One last good article, including a mention of the silliness of all the pieces that said min payments could go from 2% to 4%:

http://www.cardratings.com/creditcardnews/2006/01/confusion-rampant-regarding-increased.html

Again, though, this doesn't stop Amex from spelling out a possibility of 4% min in writing.

PS I have an Amex Clear, and I read through the terms. The 4% in question is in a series where they take "the lesser of". So the 4% should never come into play except in really weird circumstances. It's written like this (simplified and not in the same order):

Greatest of 1, 2 and 3 below:

1) 2% of new balance
2) $15
3) The lesser of a and b below:

a) current billed finance charges plus 1% of the new balance
b) 4% of the new balance

(And then to whatever comes out after all of those they add 1/24 of any over limit amount, but that's not really relevant here.)

With an ongoing 3.99% interest rate, your min payment will always be 2% of new balance until it gets low enough to be 15 bucks. At least, it's hard to see a scenario where it wouldn't be. I haven't done math for all scenarios or anything, but most of these oddball settings only come into play with high interest. With 3.99%, you'll never see the current billed finance charge plus 1% of the new balance be more than 2% of the new balance. And it's the *lesser* of that and 4% of the new balance. The monthly finance charge at 3.99% plus 1% of the new balance will always be less than 4% of the new balance. It'll also always be less than 2% of the new balance, so 2% of the new balance will always be your payment until your balance is down to below $750 (at which point it would be $15).

Anyone see a flaw in this reasoning? I can't see it working any other way with that rate.

PPS The language is the same as your link in the first post. I simplified it a bit.