American Express Unveils Its Own Extended Payment Card
NEW YORK (AP) _ American Express Co. today announced it was issuing credit cards that, unlike its regular charge cards, allow cardholders to pay their balances over time.
The so-called Optima card reflects American Express’ increasing campaign to encourage the use of its charge cards for retail sales, instead of the traditional travel, business and entertainment areas.
The regular American Express cards require customers to pay off their entire outstanding credit account each month, although some travel expenses, including airline tickets, can be paid off over time. Customers pay an annual fee for use of the card.
Optima - available only to creditworthy holders of regular American Express cards - will be similar to bank credit cards, such as Visa and Mastercard, which allow customers to pay off all or part of their outstanding monthly balance.
″Our research showed that a significant number of cardmembers wanted us to provide some form of extended payment for a wide range of purchases,″ said Aldo Papone, president of American Express Travel Related Services. ″The Optima Card gives cardmembers that choice, within the family of American Express card products.″
Like bank credit cards, Optima will charge interest on the outstanding balance, in this case a rate set at 1.7 to 1.8 times the prime rate, which now is 7.5 percent. The card rate, currently 13.5 percent annually, will be adjusted every six months.
There is a 25-day grace period, meaning interest charges begin mounting on balances unpaid for more than 25 days after the account statement is made.
The annual fee for Optima will be $15 for American Express green and gold card holders, while platinum card holders will pay no fee.
Optima cards are available to regular cardholders of at least one year with ″a record of prompt payment,″ the company said in a news release. The cards will be accepted at the roughly 1.8 million businesses worldwide that already accept American Express cards.
American Express cards in years past have been used generally for business expense accounts, travel and other areas where the charged expenses are paid in full when received.
However, the company has attempted to generate greater use of its cards for everyday purchases, touting the fact that its regular cards carry no interest charges.
The company also has promoted the cards with programs such as Buyer’s Assurance, which extended the manufacturer’s warranty on certain products bought with American Express cards during a specific period.