Is New, No-Fee American Express Card Right for You?
Editor's Note: This limited-time offer has expired.
Too
good to be true? American Express has launched its first credit
card that charges no fees of any kind. The "Clear
from American Express" credit card does not charge
fees for late customer payments or for going over the card's
credit limit. In addition, the new Clear card offers a shopping
reward program at the industry standard 1% rebate level, no
annual fee, and a free credit report and credit score. What's
the catch?
None,
really. But no fees doesn't mean no interest -- consumers who
carry a balance should note that Clear from American Express
offers an ongoing interest rate a bit higher than some other
credit cards. And while no fees for late payments or over-the-limit
fees is certainly better than being charged for those same infractions,
this freedom could also put less-than-conscientious payers into
a debt hole even faster than credit cards with a forced payment
schedule.
How so? Well, read the fine print and you'll see this:
"Your
account is reviewed monthly and will be considered in default
if minimum payments are not timely paid two times during any
portion of the 12-month period ending with the Closing Date
of the current billing period. If your account is in default,
you will be assessed a variable APR of the Prime Rate plus 21.99%
for all balances."
So,
while you may not get charged a "fee" for late payments,
a couple of late payments in the same year will quickly push
your card's APR over 27% or even higher. That would quickly
eat up any savings you achieved by avoiding late fees.
Clear
from American Express may be right for those who generally make
timely payments, but don't want to feel panicked if they can't
get the check in the mail on time one month. However, if you
find yourself struggling to get those payments in on time every
month, this card "clear"ly isn't for you.
Published 10/14/05 (Modified 03/22/13)
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