Although the credit-card regulations passed by Congress earlier this year don't go into effect until 2010, one major issuer is eliminating a monthly fee on its gift cards right now.

American Express announced that it's dropping the monthly $2 fee that used to be charged on its gift cards if the card went unused for more than a year after purchase. The cards still cost between roughly $3 and $7 to purchase.

Why up to $7 to buy a gift card? Unlike a merchant-branded card, which you can only use at that particular chain, the AmEx cards can be used at any place that takes American Express.



It's typical for cards branded with the logo of a major issuer to cost something to buy. Cards like this could be convenient if you don't know a recipient well enough to know where they shop, so you're essentially paying for greater flexibility. (Although if you don't know them that well, may we suggest just getting them a nice card instead?)

The company said it isn't scrapping the monthly fee in response to next year's legislation. According to an interview with an AmEx executive in the New York Times, the company rolled back the fee in response to customer complaints about the fees that would deplete the balance of an unused card. The move actually goes beyond the rules established by the new legislation.

Analysts interviewed by USA Today in an article about the fee elimination suggest that the company is responding to customers' more frugal mindset, especially as the all-important holiday shopping season nears.

Gift cards grew in popularity for several years but sales of them dropped a bit last year. Making these cards more attractive to customers is a smart move for issuers, especially since a National Retail Federation study cited in the article highlighted fees as one reason consumers said they would hesitate to purchase gift cards.

This is good news for consumers, and we hope that other merchants and issuers take note of American Express's proactive move and follow suit by dropping their own fees and charges.