American Express Cuts Balance Transfers

June 13, 2006

By Peter Kenny

Anyone applying for a credit card from the American Express range with a balance to be transferred will have to think again.

From today American Express will not be accepting any balance transfers for new credit card applications. Any existing American Express credit card holders who currently have a balance transfer already in their account will not be affected by this decision.

American Express did not take the route of offering introductory 0% balance transfer deals but offered low APR deals for the lifetime of the balance. Many saw this as a welcome alternative to continually hopping from one credit card to another to take advantage of any 0 per cent offers. The lifetime balance transfer was a commendable 8.9% APR for the American Express Platinum card. This rate compared favourably against most personal loans and as it was for the lifetime of the balance transfer, on most occasions proved to better value for money.

A spokesperson from American Express said, “American Express will no longer be offering balance transfers for new customers from 13 June. Existing card members' balance transfer agreements are unaffected.

"We are focusing our efforts on attracting card members who primarily want to take advantage of our reward schemes such as MoneyBack and Nectar and benefit from these."

It is estimated that consumers who constantly change credit cards to take advantage of introductory 0% deals (rate tarts) cost the credit card companies over £1 billion each year.

With the recent moves by the OFT forcing credit card companies and banks to reduce their penalty charges this could be a further testament that credit cards are having to reduce offers to make up for the shortfall.