NEW YORK - American Express will eliminate monthly fees on its popular gift cards, a move that is likely to pressure competitors to do the same.
The company’s decision, which takes effect immediately, goes further than legislation Congress enacted to limit, but not eliminate, such fees.
Alpesh Chokshi, an American Express executive, said consumers love the gift cards but often complain the fee eats away at their balances. There were no monthly fees in the first year, but on the 13th month, American Express began charging $2 a month.
The company will continue to make money from the purchase charge, which ranges from $2.95 to $6.95, as well as from its share of transaction fees, up to 4 percent each time the card is swiped.
Gift cards began as a plastic replacement for paper gift certificates and were originally embraced by retailers like Blockbuster, Starbucks, and Barnes & Noble. The cards could be used only at the specific retailer.
The major credit card networks now offer gift cards that can be used at any retailer.
