The Low Rate Credit Card from American Express

For a ‘no frills’ price, no frills is just about what you get with the Low Rate Credit Card from American Express. But it has enough redeeming features to make it the ideal card for some users. It combines the perfect annual fee with a very low ongoing purchase interest rate and some limited but still worthwhile insurance cover.

The perfect annual fee

What could be more satisfying than this card’s annual fee of $0 (every year, not just the first), unless it’s the added bonus of up to four supplementary cards at the same rate? Don’t expect any frequent flyer or rewards points, however. It’s not that kind of card.

Very low ongoing purchase interest rate

This is not just a low purchase rate – it’s Amex’s lowest, and will usually be among the lowest credit card rates available in Australia at any point in time, if not the lowest. It's definitely aimed at a different part of the market from the company’s other cards, which have a normal carried-over purchases interest rate of more than 20% p.a.

Of course, if you take advantage of the interest-free days (up to 55) by paying off your balance in full each month, the interest rate won’t matter. Also note that you can’t take a cash advance with this card, which is why there’s no cash advance interest rate quoted.

Limited but worthwhile insurance cover

This is not a card for world travellers, so it doesn’t come with airport lounge access, overseas travel insurance, car rental excess cover and all the other perks packaged into high annual fee cards. But it does have two handy insurance policies for anyone planning to purchase more than supermarket items or petrol with the card.

You’ll get 90 days of cover against loss, theft or damage of purchased items, with a maximum of $2,500 per claim ($20,000 maximum in a year) and a $50 excess. Additionally, there’s useful protection against retailers refusing to accept unused goods for return within 90 days, if you change your mind, for example, or find that a gift is duplicated. If the retailer won’t take the goods back and give you a refund, Amex will (with a maximum of $500 per item, $2,000 per year).

Who will get the most from this card?

For anyone who does not expect to pay off their account balance every month, the combination of zero annual fee and low ongoing interest rate makes this an ideal extra card to keep in your pocket, to pull out wherever Amex cards are accepted without a merchant surcharge. It won’t appeal to points collectors or world travellers, and the low qualifying income of $50,000 makes it clear that Amex are aiming at the budget end of the market.

Competing low cost cards

There’s no shortage of zero annual fee cards, like the MoneyMe Freestyle Virtual Credit Card and the St. George No Annual Fee Credit Card. The trouble is, they have much higher ongoing purchase interest rates.

There are also other low interest rate cards, including the St.George Vertigo Visa and the Bankwest Breeze Mastercard, but most of them charge an annual fee, even if it’s waived in the first year.