American Express has long been known for its credit and charge cards that offer attractive reward and cashback schemes.
Until recently, the American Express Platinum Cashback card had been the clear market-leader in the cashback arena, but we've seen a few new products launched recently giving it a run for its money: the MBNA American Express card with Cashback, and Capital One's World Mastercard. Secured Loans
With activity and competition picking up in the cashback credit card arena, American Express has made some changes to the Platinum Cashback offering but have they resulted in a stronger proposition or have the benefits of this card been diluted? Let's take a look...
What's the deal?
The new American Express Platinum Cashback card pays an introductory rate of 2.5% cashback for the first three months, although the maximum you can earn at this rate is £100.
Still that means you can spend £4,000 on the card before the cashback rate drops.
Previously the introductory offer was 5% cashback for three months, so you may think the offer has been watered down but the maximum cashback you could earn at that rate was also £100.
Once the introductory rate ends, you'll earn the standard rate of cashback which is 1.25%. This is a simplification of the old version of the card which paid 0.5% on the first £3,500 of spending, rising to 1.00% on spending between £3,501 and £7,000 and 1.25% above that. The flat rate of 1.25% is therefore more generous and simpler than the old version of the card.
Customers also receive double cashback, 2.5%, every year during their anniversary month (the month they first took the card out in) as long as they've spent £10,001 or more on their card over the previous 12 months.
If you don't pay your balance off in full each month you'll be charged an interest rate of 14%.You may think this makes the new offering much more attractive than the old version of the Platinum Cashback card.
However, American Express has introduced an annual fee of £25 on the card. As a result of the fee, the representative annual percentage rate (APR) on the card is higher than the purchase rate at 18.9% (variable).
Are there any catches?
Apart from the £25 annual fee, the other main thing to note about this card is the eligibility criteria is quite high - you must earn at least £30,000 a year and have an excellent credit history.
How does it stack up against other cashback cards?
The Capital One World Mastercard offers 5% cashback for the first three months (up to a maximum of £100) and then up to 1.25% thereafter. You earn 0.5% on the first £5,999.99 spent on the card, 1% on spending between £6,000 and £9,999.99 and 1.25% on spending above £10,000. The representative APR on this card is 19.94% (variable).
If you spent £7,500 on your credit card evenly over the course of a year, then the Capital One World Mastercard you'd earn £122 cashback compared with £92.19 on the American Express Platinum Cashback Card.
However, the Amex card would be better if you spent £15,000 over a year: you'd earn £209.38 compared with £186 with the Capital One card. Therefore, high spenders will benefit from the new American Express offering despite the £25 annual fee.
Another option, worth considering, if the bulk of your credit card spending is on fuel and groceries is MBNA's American Express card with cashback. This offers 1.5% cashback on fuel and supermarket spend and 0.75% on other spending.
Verdict
Many people may be put off the new American Express Platinum Cashback card because of the annual fee. However, if you are a high spender then this card is a great deal and the cost of the fee is offset by the generous cashback rate.
It's also good to see that American Express has simplified its offering by having a flat standard rank of cashback as opposed to the tiered rates it previously offered, or the different rank depending on where you use your card that MBNA offers.
A cashback credit card is a fantasticoption for a lot of people. If you don't pay your credit card off in full every month, it's not the right card for you as the concern you'll be charged will outweigh the value of the reward.
However, according to a recent poll on moneysupermarket.com, 60% of you do pay off your credit card every month, and that is supported by figures from the Payments Council, so there are millions ofPopulatewho could benefit from a cashback and reward card.
Clearly as awareness of the benefits grow, more providers are looking to be part of this area of the credit card market. Santander has just announced that it will be launching a cashback card next month.
The 123 Card will have a £24 annual fee and will offer 1% cashback on supermarket spending, 2% on purchases made in department stores and 3% on fuel (up to a maximum spend of £300 a month). We'll aspect at this card in more detail when it is available.
Source: www.moneysupermarket.com
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