Late card payments soon to cost rewards

ATLANTA --- Another fee is coming in the new year for airline and hotel customers -- this time from your credit card company.

The message: Pay your bill on time or forfeit the miles or points you thought you earned for making purchases on your card during that month.

To get the rewards back, it's going to cost you.

American Express Co. is sending notices to customers who hold its cobranded cards with Delta Air Lines, JetBlue, Hilton Hotels and Starwood Hotels, that beginning in January rewards won't be transferred to loyalty accounts with those partners if you are late paying your bill.

You'll be hit with a $29 reinstatement fee if you want the rewards back. That fee is on top of the late-payment fee -- $19 or $38 depending on your balance. A penalty interest rate, currently 27 percent, would be assessed on future balances.

American Express is changing the policy for its cobranded cards to align those cards with its other Amex cards that have carried the same policy for months or years.

The policy doesn't just affect the habitual late payer, it affects everyone, said John Ulzheimer, president of educational services for Credit.com. "I think over the course of time, people miss a payment at least once because of unforeseen circumstances like something getting lost in the mail or a long vacation taking your focus off making your payments," he said.

Other card issuers, like Citigroup Inc. and JP Morgan Chase & Co., also have cobranded credit cards with airlines and hotels. Citi is paired with American Airlines. Chase is paired with United Airlines and Marriott International Inc.

Citi spokesman Mark Rodgers said points earned on the company's Citi cards that offer rewards through the company's own rewards program might not be available for redemption if a card holder pays late one month, and in some cases a fee for reinstatement might apply. Mr. Rodgers said Citi is not considering reinstatement fees for its cobranded cards with American Airlines and Hilton.

JP Morgan Chase spokeswoman Tanya Madison said if an account is past due for the co-branded United card, a customer will not earn miles until the account is paid. "While we do not go back and confiscate miles, we will stop awarding miles on spending going forward until the account's paid in full," Ms. Madison said.

Consumer advocates aren't surprised by American Express' move considering tough rules for credit card companies set to go into effect in February. Under the new law, lenders won't be able to increase rates on existing balances unless a person is more than 60 days behind on a payment.