American Express 46% APR

elainetalbot

I received communication from Amex yesterday. They have increased the standard APR from 15.9% to 19.9% despite Bank Base Rate going through the floor (luckily I am on a lifetime BT rate of 4.9%) and they have increased minimum repayment from 2.5% to 5% OVERNIGHT. Again, luckily my balance is fairly small and I already overpay slightly but this increase in minimum repayments means I will have to increase that amount by around £15 per month - thank god I haven't got a bigger balance. Outrageous!

billion25

I guess they want you to pay down your low rate more quickly!

When you say 'overnight', what do you mean? Surely there is a notice period before the change happens??

dylanuk

You should check out this news story: http://www.credit-card-comparison-online.co.uk/news/overnight-interest-rate-hikes-now-over.html

It basically says how credit card companies - because the government stepped in - are "pledging" to no longer make any overnight interest rate hikes - and that interest rates would only be able to be increased once every six months at a proper review.

19.9% isn't too high for a rewards credit card - and you probably shouldn't be carrying a balance on a reward credit card anyway. You'd save more on a lower rate than you will from earning BA Miles.

nomoneytoday

Numenor wrote: »

How can the annual fee be calculated into the APR when they don't know how much you're going to spend through the year?

AFAIK they base it on a spend of £1500
The monthly interest rate will be around 1.5% instead of 1.2%

jamalfatty

The APR is distorted because of the annual fee, similar thing with the Natwest Black card

http://www.natwestblack.com/summarybox.ashx - APR of 50%+ but read the explanation at bottom of page.

Without the annual fee the APR is an average rate.

They have increased the standard APR from 15.9% to 19.9% despite Bank Base Rate going through the floor

Credit card APR's have absolutely nothing to do with the base rate, if anything, the base rate going down in times of economic stress is going to push unsecured APR's up as lending becomes riskier

Optikal

Hi guys,

I work for Amex Customer Services and I can tell you that as agents, my collegues and I were shocked at this. However, despite the letter reckoning that your rate is 45% APR, it is actually more alon the lines of 19.9% APR. The 45% figure comes in because the annual fee is also calculated within there.

In typical Amex style, the boffins calculate everything in such a convoluted and complex manner that it only serves to confuse and frustrate both customers and reps alike. However rest assured, your actual rate on spend and purchase will be in the region of 19.9% breaking down to around about 1.39% monthly.

jamalfatty

Optikal wrote: »

In typical Amex style, the boffins calculate everything in such a convoluted and complex manner that it only serves to confuse and frustrate both customers and reps alike. However rest assured, your actual rate on spend and purchase will be in the region of 19.9% breaking down to around about 1.39% monthly.

I'm pretty sure they calculate it this way because consumer regs tell them they have to, I dont think they would willingly want to advertise a product with an APR in excess of 40%

nomoneytoday

Optikal wrote: »

In typical Amex style, the boffins calculate everything in such a convoluted and complex manner that it only serves to confuse and frustrate both customers and reps alike. However rest assured, your actual rate on spend and purchase will be in the region of 19.9% breaking down to around about 1.39% monthly.

1.39% monthly is 18% APR
19.9% APR is 1.525% month

[/pedant mode off]

The formula is 1+monthly rate/100 ^ 12 -1

Hunger4Unger

Just to clarify for the OP and others - the 46% rate DOES factor in the £150 annual fee and the actual APR is 19.9%.

The letter that went out to C/Ms was badly worded, however the small print does clarify the situation.

The annual fee for the card is a rise from £120, however there has been no increase for several years.

somabc

Do you think this will apply to the Amex Nectar card?

I have one and the minimum is still 2.5% and the rate has not changed (not that it really matters as it has LOB anyway).