If you’ve recently seen an ad for an American Express credit card with an APR of 704.6 percent, your eyes are not deceiving you.
This Platinum card has the highest representative APR of any credit card on record, but the eye-popping rate isn’t all it seems at first glance.
Financial comparison site Moneyfacts confirmed to This is Money that this card’s 704.6 percent interest rate is the highest APR in its system since records began in 2006.
The American Express Platinum Card is a specialist card that comes with a hefty annual fee of £650 in exchange for benefits including travel and dining around the world.
Platinum prices: American Express card interest rate seems high, but rightly so
The APR figure may seem scary, but there’s a reason it’s so high: and customers won’t actually pay anything close to 700 percent interest for the card.
The reason is that the Amex Platinum card’s £650 annual fee is included in the 704.6 per cent APR figure, as part of the advertising rules.
The card’s actual purchase interest rate is 31 percent, which is more in line with interest rates from other credit card providers.
Santander’s All-in-One credit card, for example, has an interest rate of 23.9 percent, while Barclay’s Visa Platinum All-Rounder has an interest rate of 24.9 percent.
This 31 percent figure is the interest rate when you use your Platinum Card to make purchases, not 704.6 percent, and it only applies if you don’t pay off the balance each month.
James Hyde of Moneyfacts said: “There is a £650 fee on the Amex Platinum card, which is many times higher than typical fees (if any) and therefore greatly influences the APR.” .
Andrew Hagger, founder of Website Moneycomms, said: “The actual purchase interest rate is 31 per cent APR, but it is the £650 annual fee that is the main reason for the high APR figure.”
Amex advert – This is the current advert, seen at Liverpool Street tube station with the 704.6% APR sign in the corner
How is the APR calculated?
APR stands for Annual Percentage Rate. It is the total fee you will be charged to borrow money for a year with a credit card.
APRs are calculated by adding the interest rate to the card fee. APRs do not include fees or charges for late payments or cash withdrawals
James Hyde said: ‘The credit card APR is the total percentage cost of borrowing each year, including interest and fees.
‘This contrasts with an annual fee (PA), which considers only the interest rate, rather than the total cost.
‘APR calculations are usually based on a credit limit of £1,200, spent on the first day and then repaid in equal, regular installments throughout the year.
“This standardization is intended to allow for more useful comparisons between products.”
Hyde continues: ‘The American Express Platinum card carries a very high fee of £650, which inflates the APR on this particular product to over 700 per cent.
“However, since the product charges a much more typical PA rate of 31 percent, in addition to offering a membership points incentive and various other benefits, the APR alone may not accurately represent the true value offered to customers. consumers for this product.
Flight benefits: One of the benefits of the Amex Platinum card with its £650 annual fee is being able to use Priority Pass airport lounges.
What pays the £650 fee?
So why does the American Express Platinum card have a £650 fee?
Andrew Hagger described the card as “a specialist card for high earners with a host of travel and concierge benefits rather than a conventional credit card.”
In addition to having a credit card made of stainless steel, if that’s something you value, the Platinum Card comes with a wide range of benefits that the customer entitles the customer to through the card’s annual fee.
This includes global travel insurance for the cardholder and their family, as well as the ability to add additional cardholders.
It also offers £150 to spend at selected restaurants in the UK, £150 at restaurants abroad, up to £100 a year when spent at Harvey Nichols and hotel benefits including room upgrades.
Another benefit is having access to the Priority Pass airport lounge access program. In total, cardholders have access to more than 1,400 airport lounges in 140 countries.
An American Express spokesperson said: ‘The interest rate charged on purchases with our Platinum Card is 31 per cent.
“The card’s overall APR takes into account its annual fee and we are confident that the card and its range of benefits offer excellent value for money in relation to this fee.”
Are you an American Express Platinum card holder? Let us know how to maximize your benefits: editor@thisismoney.co.uk
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