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is this the usual with Amex after downgrading after 1st free year of gold
We are writing to let you know about some changes to your Credit Card Agreement, which will begin 04/10/2023
We regularly review the Personal Rate (which is part of your Simple Rate) in line with your American Express payment history and external information from Credit Reference Agencies. We may increase your Personal Rate if this review indicates a change in your circumstances, which may indicate an increase in the risk that you might not be able to repay us. Following a recent review, your Personal Rate will be increased. Please see below for more information.
Please find below the changes to your Credit Card Agreement:
Interest Rates – the Simple Rate for Purchases will increase from 2.25% per month to 2.52% per month. (from 30.7% per year to 34.9% per year). As an example, this would cost you £0.26 extra each month for every £100 borrowed that remains unpaid on your Account.
Interest Rates – the Monthly Simple Balance Transfer rate will increase from 2.25% per month, to 2.52% per month, (from 30.7% per year to 34.9% per year). As an example, this would cost you £0.26 extra each month for every £100 transferred that remains unpaid on your Account.
You can find more information on how we charge interest at americanexpress.co.uk/interest.
Opting out of the Interest Rate increase
If you wish to discuss the decision with one of our team or to opt out of the increase to your interest rates, you can do so by calling us on 0800 917 8020. You can also contact us via online chat at americanexpress.com/uk/contact-us.
Opting out of this interest rate increase means your Account will be closed, which will prevent any further use of your Card, Interest on any existing balances will continue to be charged at your current interest rates until paid in full, and you will still need to make at least your minimum payment each month.
If you do choose to opt out, you must do so before 04/10/2023.
If you need support
We would like you to know we are here to discuss your individual circumstances, including if you are unable to increase your payments or how you have been managing your Account. We are here to help if you have financial concerns and need support. If this is the case, we encourage you to call us on 0800 917 8020 or contact us via online chat at americanexpress.com/uk/contact-us.If you care about interest rates in a credit card, you shouldn’t be really in this game.
If you are in the situation where you are paying interest on your credit cards, you probably shouldn’t be using amex. MSE is your friend in this situation.
Aren’t there other changes coming in October as well, though, like the cessation of pro-rata fee refunds? But yes, it’s bad news in general if you’re paying interest to Amex.
These interest rate emails are individual and not connected with the change of terms effective 2 October. Those changes are principally a reiteration or clarification of existing terms and the supposed end to pro-rata refunds isn’t quite as it sounds, but rather a cosmetic response to events/pressure.
I just found it a bit odd where it states as I’ve always paid in full every month by direct debit “ We may increase your Personal Rate if this review indicates a change in your circumstances, which may indicate an increase in the risk that you might not be able to repay us. Following a recent review, your Personal Rate will be increased”
I’ve just received the same on my cards.
To be fair to them, they will have seen £25k in unsecured balances with other providers appear on my credit report over the last year with only minimum balances being repaid each month.
To be fair to me, it’s all borrowed at 0% with the funds to clear the debt invested in gilt TN25 which at the price I paid and held to maturity will yield approx 5.2% net pa for a higher rate tax payer (only the tiny coupon is taxable not the capital gain).
There is a potential maturity mismatch if I can’t roll the balances fee free to another 0% card, but in that case I can clear the balance through other means. Meanwhile each month that passes I’m £100 up for little effort.
Cannier than paying for debt, but you’re still not achieving a positive real return.
As there is no enforceable means for Amex (or any other lender) to indemnify their financial exposure in your case by forcing you to use any of your TN25 invested funds to repay your credit card debts, the “To be fair to me” statement is meaningless to anyone, including yourself if your circumstances change such that you need your TN25 investment to fund an unexpected life event.
Well the TN25 has daily liquidity albeit there is a risk of not getting back the original investment if you trade out prior to maturity. But the risks of this are mitigated by this being a short duration bond maturing in 17 months.
I’m not sure real return is relevant here – simplified the choice is:
£0 in TN25 and £0 debt
or
£25k in TN25 with YTM 5.2% and £25k owed at 0%The average gain on TN25 held to maturity will be a touch over £100 per month which is on £0 of my own capital.
The alternative way to look at it is that the £25k owed is also being eroded in real terms by inflation.
otherwise known as stoozing
Cannier than paying for debt, but you’re still not achieving a positive real return.
As there is no enforceable means for Amex (or any other lender) to indemnify their financial exposure in your case by forcing you to use any of your TN25 invested funds to repay your credit card debts, the “To be fair to me” statement is meaningless to anyone, including yourself if your circumstances change such that you need your TN25 investment to fund an unexpected life event.
Until you know the inflation rate for the holding period, you cant know what the real return will be. Past inflation rate isnt an appropriate measure to use.
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