(Reuters) - American Express Co (AXP.N) is raising interest rates for a large number of its credit cards following a review that began a year ago, a company spokeswoman said.
The company’s U.S. consumer credit cards, which have annual rates well below market rates, some as low as 3.25 percent, will be affected, Elizabeth Crosta said.
AmEx is raising its annual percentage rates by an average of 2.5 percentage points to align the rates with what it offers currently to customers with similar credit profiles, Crosta said.
The annual rate for new customers will be at least 12.99 percent, but some of its older customers would continue to have lower rates despite the hike, Crosta said.
The company sent letters to its cardholders saying it is making adjustments after finding its rates were below those of rival cards, Bloomberg earlier reported, citing a copy of the letter.
More than a million cardholders would be affected by the hike, Bloomberg reported
The proposed raises will affect the company’s variable-rate products, including some of its proprietary and co-brand credit cards, Crosta said.
Earlier this month, AmEx said its earnings would suffer for two years after failing to renew deal with Costco Wholesale Corp (COST.O).
AmEx shares were flat at $81.30 in morning trading on Wednesday on the New York Stock Exchange.
Reporting by Ismail Shakil and Amrutha Gayathri in Bengaluru; Editing by Maju Samuel