This American Express Platinum card has an APR of 704.6% – here’s why

If you have recently spotted an advert for an American Express card with a 704.6 per cent APR, your eyes do not deceive you.

This Platinum Card has the highest representative APR of any card on record – but the eyewatering rate is not all that it first seems. 

Financial comparison site Moneyfacts confirmed to This is Money this card’s 704.6 per cent interest rate is the highest APR on its system since its records began in 2006.

The American Express Platinum card is a specialist card which comes with a hefty £650 annual fee in exchange for benefits including worldwide travel and dining.

Platinum prices: The American Express card’s interest rate seems steep, but with good reason

The APR figure may appear frightening, but there is a reason it is so high – and customers will not actually pay anything near 700 per cent interest on the card.

The reason is that the Amex Platinum card’s £650 annual fee is accounted for in the 704.6 per cent APR figure, as part of rules of advertising it.

The actual purchase interest rate of the card is 31 per cent, which is more in line with other card providers’ interest rates.

For comparison, Santander’s All-in-One credit card, for example, has an interest rate of 23.9 per cent, while Barclay’s Platinum All-Rounder Visa has an interest rate of 24.9 per cent.

This 31 per cent figure is the interest rate when you use your Platinum card to make purchases, not 704.6 per cent, and it only applies if you don’t pay off the balance each month. 

James Hyde, of Moneyfacts, said: ‘There’s a £650 fee on the Amex Platinum card, which is many times higher than typical fees (if there are any) and thus factors heavily into the APR.’

Andrew Hagger, founder of Website Moneycomms, said: ‘The actual purchase interest rate is 31 per cent APR, but it’s the £650 annual fee that is the main reason for the high APR figure.’

Amex ad: This is current advert, spotted at Liverpool Street Underground station with the 704.6% APR sign in the corner

How is the APR calculated?

APR stands for Annual Percentage Rate. It is the total rate you’ll be charged for borrowing money over a year on a credit card.

APRs are calculated by adding the interest rate to the card fee. APRs do not include fees and charges for missed repayments or cash withdrawals

James Hyde said: ‘Credit card APR is the total percentage cost of borrowing each year, comprising interest and fees. 

‘This is in contrast to a Per Annum (PA) Rate, which considers interest rate only – rather than overall cost.

‘APR calculations are generally based on a credit limit of £1,200, spent on the first day and then paid back in equal, regular instalments across the year. 

‘This standardisation is to allow for more useful like-for-like comparisons between products.’

Hyde continues: ‘The American Express Platinum Card carries a very high fee of £650, which inflates the APR of this particular product to over 700 per cent. 

‘However, given the product charges a much more typical 31 per cent PA rate, alongside offering a membership points rewards incentive and several other benefits, the APR alone may not accurately represent the true value offered to consumers by this product.’

Flight perks: One of the benefits of the Amex Platinum card with its £650 annual fee is being able to use Priority Pass airport lounges

What does the £650 fee pay for?

So why does the American Express Platinum card have such a £650 fee?

Andrew Hagger described the card as ‘a specialist card for high earners with a host of travel and concierge benefits rather than a mainstream credit card’.

On top of having a physical card made from stainless steel – if that’s something you value – the Platinum Card comes with a large range of benefits which the annual card fee entitles customers to. 

That includes worldwide travel insurance for the card owner and their family, as well as the ability to add extra cardmembers.

It also gives £150 to spend in selected restaurants in the UK, £150 in restaurants abroad, up to £100 a year back when spending at Harvey Nichols and hotel benefits including room upgrades.

Another benefit is having access to the airport lounge access programme Priority Pass. In total, card owners have access to more than 1,400 airport lounges in 140 countries. 

A spokesman from American Express said: ‘The interest rate charged on purchases on our Platinum Card is 31 per cent. 

‘The card’s overall APR takes into account its annual fee, and we’re confident that the card and its range of benefits provide great value for money relative to this fee.’