Amex Fires A Blast At Bank Cards
American Express aimed a powerful salvo at Visa and MasterCard in the credit card interest rate war. AmEx is rolling out a new system featuring lower revolving-credit rates for Optima customers with clean payment records. For those cardholders, rates will drop from prime plus 7.75 percentage points to prime plus 6 points, or 12.5%.
To qualify for the lower rates, customers have to pay their bills on time for one year and have annual charges of $1,000 or more. AmEx may gain on bank cards, which often advertise lower rates without telling customers how to qualify for them.
The move also represents AmEx' attempt to put its Optima losses behind it. In the third quarter of 1991, AmEx had $155 million in unexpected write-offs related to delinquent Optima accounts.