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American Express to Increase Credit Card Interest Rates by Over 2% | Credit card

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American Express will increase interest rates on UK consumers’ credit cards from February.

The company said the 2.3 percentage point increase in the rate – from 22.2% to 24.5% – was due to the rising costs of providing loyalty programs, rewards and benefits to his clients.

Commentators said other providers could follow suit, particularly if the Bank of England announces an interest rate hike next month.

American Express cardholders will be notified over the next two months to notify them of the change. In a statement, the company said, “American Express regularly reviews its cards to ensure that we continue to provide our cardholders with competitive credit cards that are good value for money and offer a range of benefits. .

“As a result of a recent review, we are changing the interest rates on our personal credit cards to reflect the cost of rewards, product benefits and loyalty programs, which have increased in recent years. “

The changes apply only to personal cards and business cards will not be affected. In August, American Express reduced the amount of cash back rewards Platinum Everyday and Platinum Cashback cardholders could win.

Under the new plans, the interest rate for card purchases will drop from 22.2% to 24.5%. The rate of withdrawing money from a card will drop from 27.2% to 31.5%.

Rachel Springall of financial news site Moneyfacts said that card providers who offer perks typically increase the rate they charge on a card to maintain the offers. “This American Express move appears to be for that reason,” she said.

“Typically, the risk attitude among credit card providers and the sustainability of the benefits have much more influence on prices than a change in the base rate. Indeed, in 2018, when the base rate rose 0.25%, there was no sudden rise in credit card rates afterwards. “

She said cardholders who aren’t happy with the increase should consider switching if they can find a better deal. “However, whether the switch is the right choice depends on the benefits a customer can get by using the card and whether they are able to pay off their balance in full each month.”

Expectations in the city that the Bank of England will hike rates next month surged this week after the governor said it should act to curb rising inflation and chief economist Huw Pill said that the question of whether to raise interest rates, it was a “living” question.

Andrew Hagger of consultancy Moneycomms said American Express could be the first of many providers to increase their rates in the coming months.

“Some lenders like MBNA and Halifax automatically match your rate to base rate changes, while others will make ad hoc changes,” he said. “It looks like borrowers will be forced to pay more, but anyone who has a balance each month should consider switching to a 0% balance transfer card to lower their interest charges.”


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