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I suspect Amex has survived because it has a wanky concierge service and is perceived as a status symbol by the trashy rich.
Slightly better cash back is why I have one.
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I suspect Amex has survived because it has a wanky concierge service and is perceived as a status symbol by the trashy rich.
They use those higher fees to offer better rewards. If you're spending a lot of money on them the rewards are decent.
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You can use it as a credit card if you don't mind about paying the 700%.
If you get the card and don't use it all the APR is infinite because you're borrowing £0 and paying back £650 of fee (which, under advertising rules, counts towards the APR).
It may be easier to understand with some calculations.
The APR on purchases with the card is ~31% if you don't pay them off within the same month.
The annual fee for the card is £650.So if you spend £10 on the card each month, and pay it off in full each month, you still pay AMEX back £120 + £650 = £770 a year.
So for "borrowing" (albeit temporarily) £120 you pay back £770.
This gives an APR of 541.67% (to 2.d.p).
650/120 = 5.4167£120 * 541.67% is the £650 annual fee.
If you spend a more realistic £2000/mo on the card, and pay it off in full each month, then the APR works out at a lot less.
You "borrow" £24000 and pay back £24650. This is an APR of ~2.71%.
If you spent £2000/mo and didn't pay it back in full each month, but paid it back delayed by one month the costs would be:
- £24000 to pay back the principal
- £2000 * 31% APR = £620 interest/year (or £51.67 per month)
- £650 fee
This comes to £25270 for the year, so that £1270 extra you pay equates to an APR of 5.29%.
The 700% figure is highly misleading, but I'm glad credit card companies are forced to calculate the APR this way and display it prominently on their advertising.
- £24000 to pay back the principal
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jellybaby
aggi
Greenbank
@nick_h.
It's called a charge card. You can use it as a credit card if you don't mind about paying the 700%. But nobody does. They arrange to get the balance automatically paid from their bank account every month.
Charge cards were useful when travelling in the 70s and 80s. Amex and Diners Club were the main ones. Debit cards didn't exist and credit card networks were new and still growing. At home everyone paid by cheque in restaurants and shops. But cheques weren't accepted abroad. You'd have to carry cash or use a charge card.
Charge cards were never popular with merchants because they charged a huge commission - 2.5% or so. Maybe 4%. Debit cards charged much less - 1%, 1.5% or something. So debit cards should have made charge cards extinct long ago. I suspect Amex has survived because it has a wanky concierge service and is perceived as a status symbol by the trashy rich.