American Express CEO Wants More Information for Card Consumers

The leader of credit card giant American Express welcomes changes in the credit card industry that will make rate and fee terms clearer to consumers, he told a crowd of business executives Tuesday.

American Express CEO Kenneth Chenault, speaking at the Economic Club of Washington in D.C., said in a speech, “What I believe in firmly is that the disclosure and practices of the credit card industry, some of them need to be changed in a fundamental way," according to the Reuters news service. His speech was part of a regular speaker series sponsored by the club.

Chenault said that he did not mind the increased scrutiny being visited upon the credit card industry by the U.S. Congress. He said that many of the problems in the industry have stemmed from banks and card issuers’ lack of disclosure to consumers on changes to rates and fees. Chenault also criticized the practice known as universal default which triggers higher interest rates, and in some cases extra fees, which customers default on other credit products like mortgages, other credit cards, or utility bills.

Chenault noted that American Express had never used universal defaults. “What I’m not going to do is defend practices that I don’t think work,” Chenault said, referring to universal default, as quoted by Reuters. “We never put that in and a number of companies as a result of Congress getting involved have stopped doing it.”

The use of universal default by banks has largely gone by the wayside as various states have moved to ban the practice (“State Bill would Ban Universal Default in New York,” 6/22).

“I believe very strongly that disclosure and sunlight is a way to deal with some of these practices,” Chenault said.