The message: Pay your bill on time or forfeit the miles or points you thought you earned for making purchases on your card during that month.
To get the rewards back, it's going to cost you.
American Express Co. is sending notices to customers who hold its cobranded cards with Delta Air Lines, JetBlue, Hilton Hotels and Starwood Hotels, that beginning in January, rewards won't be transferred to loyalty accounts with those partners if you are late paying your bill.
You'll be hit with a $29 reinstatement fee if you want the rewards back. That fee is on top of the late-payment fee - $19 or $38 depending on your balance. A penalty interest rate, currently 27 percent, would be assessed on future balances.
American Express is changing the policy for its cobranded cards to align those cards with its other Amex cards that have carried the same policy for months or years.
The policy doesn't just affect the habitual late payer, it affects everyone, said John Ulzheimer, president of educational services for Credit.com. "I think over the course of time, people miss a payment at least once because of unforeseen circumstances like something getting lost in the mail or a long vacation taking your focus off making your payments," he said.
Other card issuers, such as Citigroup Inc. and JP Morgan Chase & Co., have also cobranded credit cards with airlines and hotels. Citi is paired with American Airlines. Chase is paired with United Airlines and Marriott International Inc.
Citi spokesman Mark Rodgers said points earned on the company's Citi cards that offer rewards through the company's own rewards program may not be available for redemption if a card holder pays late one month, and in some cases a fee for reinstatement may apply. Rodgers said Citi is not considering reinstatement fees for its cobranded cards with American Airlines and Hilton.
JP Morgan Chase spokeswoman Tanya Madison said that if an account is past due for the cobranded United card, a customer will not earn miles until the account is paid. "While we do not go back and confiscate miles, we will stop awarding miles on spend going forward until the account's paid in full," Madison said.
Consumer advocates aren't surprised by American Express' move considering tough new rules for credit card companies scheduled to go into effect in February. Under the new law, lenders won't be able to increase rates on existing balances unless a person is more than 60 days behind on a payment.
"Essentially if you can't charge one fee, you create a new fee," Ulzheimer said.
Banks deny that they are increasing rates ahead of the February deadline and blame fee increases on the economic downturn. American Express isn't saying how much revenue it expects to generate from the new reward reinstatement fee for cobranded cards.
American Express spokeswoman Desiree Fish said her company currently transfers Delta SkyMiles to its cardholders' loyalty accounts for eligible purchases even if they are late paying their bill.
She said that in addition to changing the policy for cobranded cards to be in line with its other cards, American Express also wants to "incentivize good behavior, to say you should pay on time, and if you don't there are penalties."
Delta said in a statement that the changes to American Express' terms and conditions are consistent with changes across the credit card industry and also include new benefits for Delta customers, including the ability to earn unlimited SkyMiles for purchases on the credit card each year.
Here are some steps you can take to avoid the headache of losing your airline or hotel rewards earned on your credit card:
-Always know when your bill is due and make sure you pay it on time. Set up e-mail billing alerts for your card.
-Manage your account online. Schedule electronic payments using your checking account at your bank. Many banks allow free online billpay, and with major credit card companies the payments often post the same day as the payment is scheduled.
-Read the fine print. Don't throw away those legal notices you get from credit card companies. Terms and conditions are being changed all the time. Know the terms, so you can protect your credit and your rewards.