Credit cards have evolved over the years. Initially they were only used to cover cash flow gaps, however today credit cards also have other benefits that draw you to the card. Some credit cards give travel points, air miles that can be used toward hotel stays, airplane tickets, and merchandise. These partnerships help to make a credit card more attractive but do cost those involved some profits.
One way to get around this, and recoup some costs, American Express has enacted a new regulation with cards that are cobranded with Delta Air Lines, JetBlue, Hilton Hotels, and Starwood Hotels, where rewards won’t be transferred to your loyalty account with those partners if you are late paying your bill. This regulation will take effect on January 1st, 2010. Those who do not pay their bill on time will not be granted their points for that month and will have to pay some hefty fees if they want to get those points back.
After a late payment is made and you want to recoup the points you will have to pay the late fee, but also a reinstatement fee of $29. On top of that fee they will hit you with an increase of your interest rates. Getting your points back might be too costly!
American Express states that they are enacting this new regulation to cobranded cards to ensure consistency because they already had this policy for non-cobranded cards.
The morale of the story: if you have a credit card that accumulates points, make sure you can pay for all the items on your bill, or at least the minimum payment. If you can pay for the items, be sure to pay on time, because you may be out more money, for no good reason!
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