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)