New American Express Credit Card Touts Consumer Friendly Features
By Nancy Castleman, CardRatings.com Consumer Reporter
Credit card lenders are listening, and what they are hearing is a lot of people complaining about fees -- annual fees, late fees, over-the-limit fees, balance transfer fees, and cash advance fees. American Express is offering a new credit card, known as Clear, which has no fees, an automatic rewards program, and useful credit management tools. According to Larry Sharnak, Executive Vice President and General Manager of Consumer Lending Products at American Express,
"Many consumers have told us they want a credit card with no fees, automatic rewards, and the ability to pay over time -- all backed by the world-class service they expect from American Express. Clear is designed with these customers in mind."
AmEx isn't the only lender trying to appeal to the fed-up-with-fees crowd. Citibank is heavily adversiting a similar card, Simplicity, and Commerce Bank introduced its no-fee Visa card in August.
Benefits of the Clear Card
The Clear credit card comes with no fees of any kind. For example, there are:
- No annual fee
- No late fees
- No over-limit fees
- No balance transfer fees
- No cash advance fees
The card also features an attractive 3.99% fixed rate on initial balance transfers (on balance transfer requests submitted with the card application) that is good for the life of the balance (this is not an introductory rate). However, the rate on future transfers is pegged between 12.99% to 16.99%.The Clear card also comes with a free user-friendly credit report and credit score every 12 months, account alerts, including payment due reminders and balance updates, as well as purchase, identity theft, and travel protection.
Down the Road
After the introductory purchase rate expires on a Clear card, which will be six months to up to a year later, depending on how American Express evaluates your application, the card will have a rate anywhere from 12.999% to 16.99% -- again, depending on how you are evaluated. Of course, the rates are likely to be different by the time the card's standard APR takes effect. And remember, these days, the only way interest rates are going is up. However, based on the current average interest rates on credit cards, it appears that Clear will be competitive with many other mid-range pieces of plastic, especially those with no or few fees.
So What's the Catch?
If you always pay your bills on time, there is no Clear catch -- as far as new purchases are concerned. However, if you're late on payments more than once, you'll pay through the nose! As Molly Faust, Vice President for Public Affairs and Communications at American Express, explains:
"It's only if you are late twice in a twelve month period that your APR would be increased."
Increased is putting it mildly! The rate will skyrocket -- to 28.99% as of this writing, which could be far more costly to cardholders than the typical $39 late fee on a credit card. And while there won't be a fee for just one late payment, just like other credit card issuers do, American Express reports all late payments to the credit bureaus, which means that the rate on some of your other cards might rise as a result of a single late payment to American Express. However, as Molly Faust was quick to point out, the rate on the Clear card -- or on other American Express cards -- will not change if you are late on other bills. As she puts it:
"We do not practice universal default. We do not change a customer's APR based on behavior with another creditor."
Click here for more information on what you can do to avoid this type of credit card interest rate hike.
Two Clear Tips
1. If you feel as though you cannot be trusted to pay your Clear card or other bills on time, get your bank or another bill paying service to make your payments automatically, well in advance of the due dates -- so you won't incur the risk of having your interest rate hiked up into the stratosphere. Since late payments normally stay on your credit report for seven years, it's very important that late-payers take this step to improve their credit picture -- so down the road, they can take advantage of deals like the Clear card's 0% rate and 1% rewards program.
2. If you have a balance to transfer, be aware that Clear's balance transfer APR is not considered a great balance transfer rate. However, if you can qualify for the Clear card, chances are, you can also qualify for cards that are now offering 0% interest on balance transfers! You can begin by perusing CardRatings.com's picks of 0% balance transfer credit cards.
Hopefully these tips will help you have a clearer understanding of whether Clear is the right card for you. :0)
We welcome your comments about credit card issues in our popular credit forum!
Nancy Castleman has spent 20+ years helping people get out of debt, save money, and live better on less. Along with her partner, consumer advocate Marc Eisenson, Nancy is known for her work on mortgage pre-payment, and for first explaining "credit card math" in her often acclaimed free e-letter, The Pocket Change Investor. Find it, along with many articles from back issues, special reports, link picks, and book reviews, on her Good Advice Press Web site. You can also see pictures of her 10,000 square foot organic garden and her nine grandchildren.
But what she'd most like you to do is read about her book, Invest in Yourself (Wiley, 1998, 2001), which she wrote with Marc Eisenson and Gerri Detweiler. Nancy considers this book, which discusses how to invest your time, energy, and money to create the life you want, to be her life's work. Nancy's books have received rave reviews in leading national publications, including USA Today and Money Magazine.
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