Yahoo Finance Amex’s major $108 move targeting young Aussies sparks warning: ‘Tread carefully’
The Amex Essentials Rewards Credit Card gives young Aussies access to a range of perks but it can “sting quickly”.
American Express has launched a new credit card aimed squarely at capturing younger Aussies. The rewards card comes with perks on dining, retail and streaming services, but there are some important catches to be aware of.
The Amex Essentials Rewards Credit Card allows cardholders to earn rewards points on every eligible purchase they make for a relatively low fee of $9 per month, or $108 a year.
RateCity research director Sally Tindall told Yahoo Finance the card “shines” in the perks it offers but was let down by its high interest rate.
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“The AMEX Essentials Rewards card includes an eye-watering interest rate of 23.99 per cent, which puts it head and shoulders above the vast majority of credit cards, and not in a good way,” Tindall said.
“It's an unusual interest rate to pick for a card Amex believes will appeal to a younger generation of credit card users, who at last check were flocking to fee-based BNPL (buy now, pay later) services and credit cards touting 0 per cent interest rates.”
The average credit card interest rate is currently 17.69 per cent, while rewards credit cards (which typically have higher rates) have an average rate of 20.71 per cent.
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Unlike BNPL services, the card also requires only a 2.5 per cent minimum repayment so you’re not forced to pay off your debt in full. If you’re unable to clear your debt in full, Tindall said interest rate charges could “sting quickly”.
While the $108 per year annual fee is well below the rewards average of $221 a year, RateCity did find there were eight other cards on the market offering ongoing rewards points with no annual fee. That includes Amex’s Qantas Discovery and Velocity Escape cards.
What does the Amex Essential Rewards credit card offer?
Amex Australia vice president of acquisition Will Thorne said the Essential Rewards Credit Card was set to appeal to Gen Z and Millennials who are looking to get a “little bit extra” back on their spending.
“We want to show them the powerful backing that comes with American Express and this new card is part of our continued efforts to drive brand relevance across generations,” Thorne said.
Rewards perks include:
5 x points on eligible eats and drinks
3 x points on selected streaming subscriptions
2 x points on selected major retailers
1 x points on everything else
The card also offers a relatively low minimum credit limit of $2,000, which may appeal to those on a lower salary who might not qualify for fancier rewards cards.
It also comes with smartphone screen insurance of up to $500, twice a year.
Word of warning
Tindall said people looking to take advantage of AMEX perks could potentially come out on top but they needed to “tread carefully”.
“The perks are what’s going to bring customers in the door, but they’ve also got the potential to encourage people to spend more at certain stores,” she said.
“For anyone who can’t clear their debts in full every single month, this card is not for you. Close the browser down and head for the no-frills credit cards offering interest rates under 10 per cent – there are over 10 different options to choose from. Better yet, go cold turkey.”
Additionally, while many major retailers access Amex payments at no extra cost, they aren’t accepted everywhere and some retailers may charge higher surcharges.
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