Save money with your credit card purchases? Sure, you can save money on the interest you pay by switching to a low interest rate credit card. However, according to the good folks at American Express, you can actually build extra savings with every purchase you make with the One Card from American Express and have those savings deposited into a high yield savings account.
How the One Card Works
According to the offer I received from American Express, American Express Bank FSB establishes a high yield savings account for you as soon as the
card arrives. For every purchase you make with the One card, AmEx will contribute 1% of the amount to your high yield savings account. The 1% contribution
is essentially a rebate. The APY (annual percentage yield) on the savings account is 5.00%. On top of that, American Express will throw in $50 8-12 weeks after you make your first purchase.
Other One Card Benefits
Outside of the savings features, the One offers flexible payments. You can choose to carry a balance or pay it off in full every month. With the interest
protection feature, you never have to pay interest on new purchases. The One card also has no pre-set spending limit, but to help you keep your spending in
check, there’s a spend tracking alert to notify you, via mail or text message, when you’ve reached the spending limit you’ve set for yourself.
The Fine Print
Now before going over to American Express’ website to apply for the One, let’s look at the terms & conditions of this offer to help us figure out if its worth our
while.
In reviewing the terms & conditions for the One card, the following become quite clear:
One offers a fixed APR during the promotional period. After 1/31/07, however, the APR becomes variable. At the low end the APR is 14.24% and at the high end its 16.24%.
There is a $29 late fee. In the event late payments are made 3 or more times or 2 consecutive times, or your payment is returned 2 or more times, your account will be deemed to be in default. Any promotional APR would terminate when the account goes into default and the rate would become variable
at prime plus 21.99% on all balances during the default period. When any default APR is applied, it would apply for a minimum of 12 consecutive months starting with the current billing period.
Payments are first applied to balances which do not incur finance charges before balances that have finance charges. For balances that have finance charges, payments are first applied to balances with lower APRs before balances with higher APRs.
The Verdict
I’ve always loved AmEx cards because using them requires you to pay your balance in full every month in order to maintain full card member benefits. However, the One Card offer is just too gimmicky to be an effective savings tool. Even if you buy everything with the card and you pay your balance in full every month and you incur no balances that accrue interest charges, the 1% on every purchase is simply not enough to justify applying for this card. If the rebate was 5% on every
purchase, it could be quite useful. In my opinion, you would be better off looking for a balance transfer card arbitrage opportunity.
