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Amex Now Into Forced Spending

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http://www.thisismoney.co.uk/credit-and-lo...=moretopstories

AMEX asks customers to spend more

Alan O'Sullivan, This is Money

27 August 2009

American Express is encouraging some of its Platinum credit card customers to spend over twice their current amount despite the UK's rising personal debt crisis.

The credit card provider is almost doubling the minimum amount of money Platinum card users will have to spend in order to take advantage of its cashback scheme.

Currently, customers have to spend at least £2,400 on the card to get a cashback payment, but this will be raised to £4,250 from October 1.

It is also introducing an annual 'dormancy fee' on the card of £20 if no transactions have been made in the previous 12 months.

The term 'transactions' only relates to purchases, however, not payments, cash advances, or balance transfers.

These changes are contained in a booklet outlining wider industry-wide measures being introduced under new European rules, which have recently been posted out to customers.

The rules compel providers to simplify their terms and conditions, but banks are increasingly using this opportunity to sneak in extra charges in the small print of their accounts.

Amex currently has a minimum £12 cashback payment, but this will be raised to £25 from October 1.

As customers only earn 0.5% cashback on spending up to £3,500 per year and 1% on further spending up to £10,000, they would have to spend more than £4,250 each year to qualify for their £25 through the cashback scheme. Spend less and they will no longer get cashback.

The card has a relatively high interest rate of 19.9%, which is 1.8% higher than the average credit card rate, according to price comparison website Moneyfacts.co.uk.

A spokeswoman for Amex denied it is encouraging its customers to spend more and that it was sneaking in the charges under wider changes to its terms and conditions.

She said: 'The vast majority of our existing cardholders spend over or near that amount anyway, so we're confident they will reach that threshold. Most of them also pay off their spending in full each month so we are confident they are not spending more than they can afford.'

However, the spokeswoman was unable to explain why if customers already spent over that level anyway, the company decided to raise the minimum threshold. She added: 'The majority of our customers enjoy their cashback. For the majority of them, this will not be a major change.'

Many credit card users will question the motive of a provider that raises its minimum spending levels, however. The card company Egg caused national outrage last year when it closed the accounts of approximately 160,000 customers, who were allegedly cut off because they paid off their balance in full each month, thus depriving it of income from interest payments.

The Amex changes, which only apply to existing customers and not new ones, come at a time when personal insolvencies are at their highest level in over 50 years, with just over 33,000 people filing for insolvency between April and June this year. The new cashback payments and dormancy fee will only begin to affect customers 12 months after their next card anniversary date.

In an economy that's no longer spending beyond its means, high-priced debt like a credit card that creams off 1-2% of every transaction makes no sense.

Edited by AvidFan

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In an economy that's no longer spending beyond its means, high-priced debt like a credit card that creams off 1-2% of every transaction makes no sense.

I'm just waiting until they start sending bundles of cash in the post so you have to use it to pay the card back.. 'Dear Sir, we've taken the liberty of withdrawing £1000 from your card and sending it to you..

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I wonder if other card issuers will follow suite?

Looks like they want to get shut of low spending users.

I think this is the case. Before we left the UK I had an MBNA (Platinum) on which I spent about 300 quid a year. They practically begged me to get rid of the card and introduced a punitive interest rate for new purchases.

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Minimum spend of £354 per month to qualify.

Not a lot really if you put all your shopping, fuel and other bits and bobs on it.

I've being doing this for a couple of years now with my visa card. Put just about everything on it each month and pay off the full bill. It gives me cashback plus lets me put that money in a savings account for over 20 days a month before removing it to pay the bill.

Granted the savings account isn't paying much just now. :angry:

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AMEX asks customers to spend more

Alan O'Sullivan, This is Money

27 August 2009

OK, you pay me £5k, I pay you £5k. We provide each other some goods or service and proper receipts, and ...

(dammit, can't say that on here with the taxman watching :angry: )

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I'm just waiting until they start sending bundles of cash in the post so you have to use it to pay the card back.. 'Dear Sir, we've taken the liberty of withdrawing £1000 from your card and sending it to you..

It wouldn't surprise me given how desperate they are to send you cheques.

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Not a lot really if you put all your shopping, fuel and other bits and bobs on it.

I do that, and most months come in at under £200. Which is a shame, as my creditcard gives cashback. But add the occasional big purchase: the hotel bill, or the new bike, and it works.

Hmmm, wonder if I could pay the utilities and council tax by direct debit onna creditcard and get the cashback?

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Interest rate is irrelevant. Just spend everything possible on AMEX and pay it off by direct debit every single month. Just booked my holiday to South Africa in December for the AirMiles that I've accumulated and used the Companion Voucher to bring my girlfriend.

k it wasn't really free we had to pay £460 in taxes for the 2 of us but all the same, much better than the £1200+ it would have been otherwise.

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