AMEX Account Terms / Penalty APR For Existing Balances

[CJ7]

Just got a change of account terms notice on my Hilton AMEX today - clearly in the cardholder's favor:

"Effective immediately, we are removing the section on Penalty APR for existing balances from your cardmember agreement.

This language will no longer apply to your account."

Excuse me, but hasn't this been illegal since the Card Act of 2009? 

"...Fairness – Prohibit certain practices that are unfair or abusive such as hiking up the rate on an existing balance"

Did AMEX just now get wind of this?

[iv]

Nope, penalty APRs on existing balances are not illegal, if the account goes 60 days past due.

They are explictly allowed for in the CARD Act:

SEC. 171. LIMITS ON INTEREST RATE, FEE, AND FINANCE CHARGE INCREASES APPLICABLE TO OUTSTANDING BALANCES.

(a) IN GENERAL.—In the case of any credit card account under an open end consumer credit plan, no creditor may increase any annual percentage rate, fee, or finance charge applicable to any outstanding balance, except as permitted under subsection (b).

(b) EXCEPTIONS.—The prohibition under subsection (a) shall not apply to—

[...]

(4) an increase due solely to the fact that a minimum payment by the obligor has not been received by the creditor within 60 days after the due date for such payment, provided that the creditor shall—

(A) include, together with the notice of such increase required under section 127(i), a clear and conspicuous written statement of the reason for the increase and that the increase will terminate not later than 6 months after the date on which it is imposed, if the creditor receives the required minimum payments on time from the obligor during that period; and

(B) terminate such increase not later than 6 months after the date on which it is imposed, if the creditor receives the required minimum payments on time during that period.

[CJ7]

Wasn't aware of the exception, thanks.

[RonM21]

Good data point iv

[alkaline]

Nice, just saw this change on my statement today.