Two major credit card companies - American Express and Discover - are eliminating overlimit fees on consumer accounts, a move seen as a response to President Obama's May legislation that changes the way such companies can do business starting in February 2010.
American Express card holders will see the changes take effect October 1 (Stock Quote: AXP). Discover has yet to set a date for the change (Stock Quote: DFS).
The fee eliminations, first reported by American Banker, will eliminate an estimated 15% of the companies' fee-based revenue stream. This change is good news for some consumers, but companies are likely to look to recoup monies in alternative ways.
In the meantime, American Express cardholders will cease to pay the up to $35 per transaction that every purchase over their credit limit used to cost them (approval of such purchases have been judgment calls made at the time of the sale by the company). Even though fees will not be charged, American Express says it will continue to selectively approve overlimit purchases on a case by case basis.
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