Answered - AMEX low rate offer | Australian Frequent Flyer
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Answered AMEX low rate offer

Demonoid

Member
Joined
Dec 17, 2012
Messages
222
This is not a AMEX rewards question per se - but is nonetheless travel related

I had a 3.99% p/a interest rate on purchases for 6 months land in my inbox for my existing AMEX Explorer. No idea if this is targeted or not.

I normally pay my balance off each month, however due to the current Velocity double status credit promo, I want to pull the trigger on some flights, which will mean I will not be able to cover the balance this month.

If I chose to activate the 3.99%, given I am mid statement cycle, how will I know to only pay the balance in full for purchases made prior to the new interest rate kicking in, when my statements comes out towards the end of this month? Has anyone had any experience with this?

For example, let's say my statement comes out and I have $10,000 owing, with $5000 worth of purchases attached to the 3.99% (which I will carry over), and the other $5000 attracting the full interest which I will pay so I won't be charged it. Is it as simple as paying $5000 and AMEX is smart enough to know I have paid in full all purchases prior to the 3.99% kicking in?
 

hossein_au

Established Member
Joined
May 2, 2013
Messages
1,454
Not sure about AmEx, but for all credit cards I have ever come across payments are put against the portion of the balance with the lowest interest rate. In your example, your $5k payment will be chalked up against the $5k with the lowest interest rate and the remaining $5k with high interest rate will be carried forward. This maximises interest payable to the bank. Who would have thought bank set up the system to maximise their own benefit??!!

One way around your issue is to pay off the balance mid-cycle, and carry a balance of zero for a couple of days. Then put charges on the card and activate the offer against the new charge. There will be no confusion that way. On many occasions I have paid off my cards mid-cycle and have put new charges (and have enjoyed the 45-day interest free period offered with many credit cards).
 

benjy

Active Member
Joined
Dec 18, 2013
Messages
726
This is from NAB:
Credit card payments are applied against balances that attract a higher interest rate before balances that attract a lower interest rate. Amounts are paid against amounts that have appeared on a statement before paying off amount that have not yet appeared on a statement.
 

twiningb

Member
Joined
Sep 2, 2015
Messages
333
Oh, that's new (to me). Great to see at least one bank puts logic and common sense ahead of profit.
Pretty sure they didn't do this for logic and common sense (which favours the old way from their perspective) but because the law has required it for the last few years.
 

Demonoid

Member
Joined
Dec 17, 2012
Messages
222
Thanks all for your responses. I decided to give AMEX a call and all they said was that the statement would clearly show/itemize which purchases were made pre the 3.99% offer (i.e. accruing full interest) and which purchases were on the 3.99%. She said it was then simply a matter of ensuring my payment matched the amount of the high interest purchases i.e. the payment would go to high interest purchases first. Lets hope so.
 

Demonoid

Member
Joined
Dec 17, 2012
Messages
222
Only 5 T's and C's. I've highlighted the relevant one i think

1. This promotion is subject to the American Express Credit Card Conditions.

2. From the day after you successfully accept the offer, all new purchases made for the next 6 months will have a promotional interest rate of 3.99% p.a, after which these purchases will revert to your standard purchase interest rate.

3. You will receive a ‘congratulations’ message when you successfully accept the offer. If unsure, check your offer status by calling the number on the back of your Card.

4. This Offer does not apply to cash advances, balance transfers, charges for travellers cheques, fees or commissions, or any existing balance or purchases on your Account.

5. The Offer is only valid for the Card Account ending xxxxx and any Supplementary Cards linked to that Account.
 

hossein_au

Established Member
Joined
May 2, 2013
Messages
1,454
The highlighted point refers to what *expenses* would be treated as low-interest. I am simply trying to clarify how your *payments* are applied to any balance already on your card. Let me explain:

1) Day W, you have $A balance on your card (high interest),
2) Day X, you accept their low-interest offer,
3) Day Y, you spend $B on the card (based on the T&C you have highlighted, this $B expense will get the low interest rate),
4) The balance on your card now is $A + $B
4) Day Z, you pay $C towards the balance on your card.

Now the question is: will $C be applied towards paying off $A (leaving $A-$C high interest expense, and $B low interest)? Or will it be applied towards paying off $B (leaving $B-$C as low interest, and $A as high interest)?

I don't know what the answer is. Based on @benjy post, it looked like the former is used by NAB. You will need to convince yourself which method is used by your bank.
 

Demonoid

Member
Joined
Dec 17, 2012
Messages
222
The highlighted point refers to what *expenses* would be treated as low-interest. I am simply trying to clarify how your *payments* are applied to any balance already on your card. Let me explain:

1) Day W, you have $A balance on your card (high interest),
2) Day X, you accept their low-interest offer,
3) Day Y, you spend $B on the card (based on the T&C you have highlighted, this $B expense will get the low interest rate),
4) The balance on your card now is $A + $B
4) Day Z, you pay $C towards the balance on your card.

Now the question is: will $C be applied towards paying off $A (leaving $A-$C high interest expense, and $B low interest)? Or will it be applied towards paying off $B (leaving $B-$C as low interest, and $A as high interest)?

I don't know what the answer is. Based on @benjy post, it looked like the former is used by NAB. You will need to convince yourself which method is used by your bank.
Using your example, I plan on paying an amount $C equal to $A (high interest), and hoping that payment will indeed be applied to the high interest purchases. I will definitely call them again when the statement comes out in a couple of weeks - although I would have preferred something in writing in the T's & C's similar to the NAB example above. I will let you know how it goes.
 

hossein_au

Established Member
Joined
May 2, 2013
Messages
1,454
This is from NAB:
Using your example, I plan on paying an amount $C equal to $A (high interest), and hoping that payment will indeed be applied to the high interest purchases. I will definitely call them again when the statement comes out in a couple of weeks - although I would have preferred something in writing in the T's & C's similar to the NAB example above. I will let you know how it goes.
I don't think the amounts being equal will have anything to do with how the payment is applied. It will be based on their T&C, which sounds like you already plan to clarify (which is good).
 

Demonoid

Member
Joined
Dec 17, 2012
Messages
222
So just to report back on this - statement came out today. Front page showed the 2 interest rate tiers. 20.74% normal and 3.99% promo. However each transaction was not classified! So I had to call and confirm that all purchases listed after Feb 4 were on the lower rate. The lady confirmed it. So my high interest transactions totalled about $2,500 out of a statement total of about $6,000.

I then confirmed that I could make that payment for $2,500 odd and that it would be applied to the higher interest purchases would ensure that I am only charged the minimal interest on the remaining $3,500 (plus of course all subsequent purchases). She confirmed it. And admitted that the whole process in not really user friendly - but it should work. The proof will be on the next statement.
 

Revolutionary String

Junior Member
Joined
Dec 22, 2018
Messages
45
Any payments should normally take off charges which attract the highest interest, although I had a similar thing with my Essentials card, where it wasn't clear what interest rate corresponded with which charge.
 

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