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American Express cuts credit card interest rates

American Express cuts credit card interest rates

The latest change to credit card interest rates from American Express could see Australians clear their card debts a year and a quarter sooner, saving hundreds of dollars in interest payments, according to RateCity calculations.

The American Express Low Rate Credit Card saw its interest rate fall from 11.99% to 8.99% on 9 April 2018 for existing customers, and from 11 April 2018 for new customers. While this relatively simple card lacks access to the Amex reward programs, it does allow cardholders to enjoy Amex Offers, and no annual fee.

RateCity has calculated that with this interest rate reduction, if an Australian with an average credit card debt of $4198 chose to only make the minimum required repayments, they would clear their debt one year and three months sooner, saving $802 in interest charges.

Interest charged on 11.99%, min repay of 2.5% or $30$6501
Interest charged on 8.99%, min repay of 2.5% or $30$5699
Money saved$802
Time saved1 year, 3 months

The rate change from American Express is the latest example of a trend sweeping through Australia’s credit card marketplace, though over the past 14 months, while several lenders have introduced new low rate credit cards, relatively few have cut rates on their existing cards:

  • CBA introduced a new “essentials” credit card early in 2018 with a rate of 9.90% (equal 6th lowest on RateCity)
  • Westpac introduced a new “lite” credit card in mid 2017 with a rate of 9.90% (equal 6th lowest on RateCity)
  • ING introduced a credit card to existing customers with a rate of 11.99% and no annual fee in May 2017
  • HSBC introduced a new low rate credit card in February 2017 with a rate of 13.25%
  • ANZ cut the rates on their low rate platinum card from 13.49% to 11.49% and their low rate classic card from 13.49% to 12.49%
CompanyCardRateAnnual feeInterest free days (up to)PerksCons
American ExpressLow Rate8.99%$055

0% p.a. on BTs for the first 12 months, purchase protection and refund protection

Late payment fee of $30. Amex not accepted everywhere

Community First Credit Union

Low Rate Visa / McGrath Pink Visa

8.99%$4055Low rate, low annual feeLate payment fee of $25
Easy Street Credit UnionEasy Low Rate Visa credit card8.99%$4055Low rate, low annual feeLate payment fee of $25
Bank AustraliaLow Rate Visa Credit Card9.39%$590Low rateNo interest free days
G&C Mutual BankLow Rate Visa Credit Card9.49%$5050Low rate, low annual feeCash advances 15.49%

RateCity money editor, Sally Tindall, described the rate cut from American Express as great news for people looking for a low rate credit card, adding that the market is slowly shifting, and that more lenders are expected to follow suit in the next 12 months.

“Customers should never accept rates as high as 24.99 per cent just for the privilege of using their plastic.”

“If you’re using a high rate card, it’s time to start looking for a new deal.  There are plenty of offers on the market with low rates and low annual fees, some even offer rewards.”

It’s important to remember that the credit cards with the lowest interest rates may not always be the best options for every borrower. Consider your finances and read the terms and conditions before making any  decisions. 

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This article was reviewed by Property & Personal Finance Writer Nick Bendel before it was published as part of RateCity's Fact Check process.

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