Discover Financial and American Express cease over-limit fees charging?

Discover Financial American Banker reported Monday, Discover Financial and American Express want to eliminate charging fees when consumers spend past their credit card limits. That is a move, coming six months before a new law clamps down on such kind of fees.

Under the new law, issuers are not required to remove over-limit fees, but they will be forbidden to impose these charges unless consumers say they want the ability to exceed their credit line.

The fees provide a significant impact to the industry’s bottom line. As it is anticipated, this year issuers are to reap $3.7 billion from over-limit fees on credit cards that is up 16% from 2008 data, according to R.K. Hammer Investment Bankers, that also stated over-limit fees to reach $35.

However it’s still uncertain whether, and to what extent, other issuers will also choke off over-limit fees.

Actually, in terms of the economic recession, most issuers have either raised fees or interest rates for credit card borrowers; many have done both.

American Express started notifying consumers last week that it will do away with over-limit fees in October. Meantime, Discover Financial says it will notify consumers "soon" that it will no longer charge over-limit fees.

Wells Fargo, Chase, HSBC and Citigroup also haven’t announced yet their over-limit policies under which consumers may be allowed to spend beyond their credit line and charged a fee.

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