American Express Co. and Discover Financial Services are eliminating overlimit fees on consumer credit cards, in one of the first concrete examples of how a new law will restrict issuers' abilities to turn a profit.
In so doing, they may lead the way for other issuers to give up on overlimit fees, a relatively small but useful source of fee income, observers said.
"Issuers should take overlimit fee income out of their P&Ls," said Philip J. Philliou, a former Amex executive and a partner in the Philliou Selwanes Partners LLC consulting firm. "Under the best of circumstances, it's a much more limited income stream than in years past, and this additional hurdle of assessing the fee" under the new law "begs the question of whether it's efficient and practical" to do so.
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