New credit card regulations are about to begin, thank God! So American Express has decided to put themselves out in front of their competition early. Instead of waiting for the mandatory regulations kick in they decided that sooner was better than later to make changes. On Wednesday 9/30/09 American Express announced they would eliminate all monthly fees on its gift cards. Before the announcement, American Express would charge a hefty $2 monthly fee on all gift cards that were not used for more than a year after they were purchased. This has been a touchy subject with many consumers who would complain about the fees for unused cards.
Alpesh Chokshi, president of American Express’s Global Prepaid unit, said “Eliminating the monthly fee was now possible because the gift card business had enough scale to remain profitable without the fees. The company will continue to make money from the purchase charge, which ranges from $2.95 to $6.95, as well as from its share of transaction fees each time the card is swiped.”
Why the $2.95 to $6.95 purchase charge?
American Express gift cards can be used anywhere that accepts American Express, which allows the consumer the freedom to buy anything almost anywhere. The fee is based on the convenience of the card. American Express started offering gift cards back in 2004 which has turned into a $1 billion dollar business a year.
Click here for more information on American Express Gift Cards.