By John Hennessy
American Express has launched a new card called One from American Express. The unique feature of the card is that consumers will save automatically with every purchase.
America Express will contribute 1% of the cardmember's purchases into an FDIC-insured, high yield savings account (currently 3.15%). Cardmembers can also contribute their own funds to this savings account.
According to Peggy Maher, senior vice president and general manager, Consumer Charge Card, American Express, "One from American Express is a new card for consumers focused not only on spending for today but also building savings for their future."
Ms. Maher continues, "If you think about all the expenses a typical family has today, it's easy to see how quickly a little savings can add up just by using the card."
Consumers can select to carry a balance on larger purchases while paying off other purchases monthly to avoid finance charges on those purchases.
Some of the other benefits of One are:
- Online account management,
- Purchase Protection,
- Buyer's assurance warranty extension,
- Return Protection, and
- Car Rental Loss and Damage Insurance.
In year one, the $35 annual fee is waived and a $25 bonus contribution will be made to the cardholders savings account upon the first purchase.
Moderator's Comment: Is there any long-term loyalty benefit from a program that entices with favorable year-one terms only to turn the tables on the benefit possession arrow in subsequent years?
I continue to be surprised, in a sad way, by how many customers are naïve about their finances.
The year-one benefits for those using the One card and who do not carry a balance are attractive. Customers who stick around for year two and subsequent years, however, are less likely to realize any high yield savings account benefits. The $35 annual fee and interest fees on unpaid balances will eat up any accumulated savings for many cardholders.
If all One card cardholders charged more than $3,500 per year to cover the annual fee, and paid off their balance every month to retain the savings they earned on their spending, the card would probably not make a lot of financial sense for American Express. American Express appears to banking on this program being a losing proposition for cardholders. - John Hennessy - Moderator