American Express grace period: The 'Please pay by' date is not your actual payment due date

Though banks and credit card companies haven't always prioritized consumers, conditions for cardholders have largely improved since the 2008 financial crisis. (However, recent developments involving some small- and mid-sized banks are a notable exception.)

Regulations, particularly the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act), enforce strict standards for how card issuers inform customers regarding interest rates, benefit changes, and payment deadlines.

As a consumer, it's still essential to review the fine print. If you possess an American Express card, determining the right time to pay can be tricky.

American Express: When is the best time to pay?

Consider a personal example: Currently, new The Business Platinum Card® from American Express cardholders can earn 150,000 bonus points after spending $20,000 on eligible purchases within the first three months of their card membership.

This offer equates to $3,000, according to TPG's August 2024 valuations. Keep in mind that you might be offered a different deal, and these offers can change at any moment.

I applied for the card in late 2018. My bonus at that time wasn't as attractive as today's offer, but I still faced a $15,000 spending requirement (now unavailable).

Reaching a $15,000 expenditure in three months is significant, so after opening the card, I diligently tracked my account activity. My first statement closed on Dec. 25, and I was surprised to find that Amex allowed just 15 days, until Jan. 9, to settle my five-figure balance.

As a small-business owner juggling multiple responsibilities, you may have just marked that date on your calendar and carried on. After all, it's crucial to pay your American Express balance by its due date.

However, something felt off. In contrast, here’s how my account page for my personal The Platinum Card® from American Express appeared at the same time:

While my personal Amex Platinum card clearly displayed the payment due date, my Business Platinum card only showed Amex's suggested "Please Pay By" date.

After speaking with an Amex representative and taking a closer look at my statement, I discovered that I wouldn't incur a late fee as long as I paid my bill in full by Jan. 19, which is over two weeks after the suggested payment date (see rates and fees).

It's crucial to understand this, as thinking you need to pay your bills two weeks sooner than necessary to avoid late fees could lead you to misallocate funds that could otherwise support payroll, inventory, or business growth. This two-week pressure can be particularly burdensome for small businesses managing tight budgets.

Confusing, right?

If you’re questioning how it can be permissible for a bank to mislead its cardholders regarding payment due dates, the reality is that it may not be legal. Subsection 201 of the CARD Act outlines the following about late payment disclosures:

"(A) LATE PAYMENT DEADLINE REQUIRED TO BE DISCLOSED.—For a credit card account under an open-end consumer credit plan that may impose a late fee due to the obligor's failure to make payment by the due date, the periodic statement as required under subsection (b) must clearly include, in a noticeable spot on the billing statement, the date when the payment is due or, if different, the date a late fee will be applied, along with the amount of the fee or charge that will be imposed if payment is made after that date."

The CARD Act mentions consumer credit plans, leaving uncertainty about whether these regulations apply to the Amex Business Platinum. Regardless, Amex's actions contradict the expectations Congress has for how card issuers should treat their clients.

Nowhere in my five-page monthly statement is there any indication of what, if any, late fees I would incur and on what date. The only reference to late fees is: "You may have to pay a late fee if your payment is not received by the Next Closing Date." Your statement might differ, so be sure to review it thoroughly.

Amex has faced criticism in the past for its due date reporting, having settled and paid an $85 million fine in 2012 for misrepresenting the "Please Pay By" date as the actual due date on accounts.

The bottom line

It’s reassuring to rely on a company that analyzes your spending to maximize your rewards. However, remember that you must advocate for yourself.

For American Express cardholders, determining when to pay can be tricky. It’s important to carefully review the wording regarding your payment due date to ensure you know when to settle your balance. When uncertain, don’t hesitate to call the number on the back of your card to speak with a representative.