American Express to Fix Late-Payment Policy

American Express is changing a controversial and worrisome policy on "past due" dates, a representative said Tuesday after the release of a Late Payment Policy Study.

American Express ( AXP) customers shouldn't take it for granted, though.

They may be in for a shock when checking their late-payment status after missing a due date. I was certainly shocked a few weeks ago, when I realized I had missed the deadline on a payment by a few days but saw my status read "30-plus days past due."

When I called to report the error, though, I was told it was not a mistake. Because of this, decided to investigate the late-payment policies of the six largest credit card issuers. contacted Bank of America ( BAC), Citi ( C), Capital One ( COF), Chase ( JPM) and Discover ( DFS) to compare their answers with American Express' on how late a customer is considered in the following example:

If a credit card bill is generated Aug. 2 and a payment due Aug. 27, how late is a payment considered if not made by Sept. 3, which would be seven days later -- and one day after the next bill is generated?

American Express was the only issuer that would consider a customer 30-plus days past due; all other issuers would consider a customer five-plus days past due.

A representative from American Express' executive consumer relations office confirmed through email correspondence that "A person will be considered 30-plus days past due on both charge card and credit card accounts if they have not made a payment by the time the next bill is generated" (Sept. 2, in the example above).

This aggressive and counterintuitive late payment policy has major implications not only for American Express customers, but for the entire credit industry.

It is out of sync with the industry standard. Since the CARD Act came into effect, regulators, consumers and the media are more alert to inconsistent and aggressive practices such as this. The last thing we need in an already-tight credit market is each issuer defining its own late-payment policy separately.

American Express is also communicating an incorrect message to its customers. American Express customers are being told they are 25 days more past due than they actually are. This is a distressing message for those who know most credit card companies will report customers to credit bureaus as being delinquent once 30 days past due on a payment.

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