Citi Simplicity vs. Clear from American Express
March 11, 2013
There are some people who look for credit cards with the best rewards or the lowest interest rates. But then there are those who just want the card with the lowest fee and the most simple terms and conditions. In fact, President Obama actually met with credit card executives back in 2009 and asked if they could each offer a “plain vanilla” credit card.
Personally, I have a hunch that Mr. Obama might have experienced his own frustration with credit cards as a young adult. If so, then he is one of millions of Americans who are fed up with complicated credit card agreements and punitive fee structures.
Thankfully, some of the banks have responded to their customers and have begun to offer simplified versions of their credit cards. To this end, Citi offers its Citi Simplicity® Card while American Express offers its Clear card.
Lets see how they match up:
Citi Simplicity® Card
Citi Simplicity® Card catches the attention of those with credit card debt by offering new applicants 0% APR financing for 18 months on both new purchases and balance transfers. After the promotional period expires, cardholders will incur interest at a rate depending on their credit worthiness. Note that like most cards, these are variable rates that can change with the Prime Rate. Fortunately, the Prime has been stable for years and is not expected to change any time soon.
As for the simple part, this card features no late fees and no penalty interest rate. In contrast, most other cards will hit customers with a $35 late fee and a massive interest rate hike when a late payment is made.
Other features include:
- An extended warranty program: “Extends the terms of the original manufacturers’ U.S. warranties (three year or less) may be extended up to one additional year on most items purchased on your card.”
- Retail purchase protection: “Protects many purchases made on your Citi card against theft or damage, up to $1,000, for up to 90 days from the date of purchase.”
- Citi Price Rewind: “Register your covered purchases at citi.com/pricerewind and Citi® Price Rewind will search hundreds of retailersâ€™ sites for 30 calendar days from the date of purchase to help find a lower price. If one is found that’s lower by at least $25, you can get the price difference back.” (source)
There is no annual fee for this card, but there is a 3% balance transfer fee. There is also a 3% foreign transaction fee on all charges processed outside of the United States.
Insider tip: Just because Citi generously allows late payments without applying late fees and penalty interest rates doesn’t mean you should ever plan on missing a payment due date. Balances will continue to accrue interest, and late payments can still hurt your credit. And if that isn’t bad enough, I am sure Citi will close the accounts of customers who consistently fail to make payments.
Clear from American Express
The American Express Clear Card seems to be several products in one. First, it is a card that offers 0% APR promotional financing for 12 months on new purchases. Next, it is a basic rewards card that features a modest 1% return on most purchases in the form of American Express shopping cards. Finally, this product is a simplified card with a minimum of fees.
How simple is it? It features no annual fee, no late fees, no balance transfer fees, no over-limit fees, and no cash advance fees.
But how good is this? No annual fee is nice, but there are plenty of other cards with no annual fee. The lack of late fees is comparable to the Citi Simplicity® Card, but in this case a penalty interest rate of 27.24% will apply for at least six months after a late payment. No balance transfer fees would be notable, but only if this card features a 0% APR balance transfer offer, which it does not.
Having no over-the-limit fee is also fairly common these days. And finally, no cash advance fee is somewhat rare, but these transactions will still be costly as a 25.24% APR currently applies to cash advances.
Speaking of interest rates, the standard APR on this card is either: 17.24, 20.24 or 22.24%, depending on the cardholder’s credit worthiness. It should also be noted that this card does have a foreign transaction fee of 2.7%.
Other features include extended warranty coverage and a purchases protections policy.
Insider tip: About the worst thing you can do with a credit card is to use it at an ATM. Even with a card like Clear that has no cash advance fee, cardholders will still face a massive interest rate. And unlike purchases that can be paid in full within a grace period to avoid interest, the interest on cash advances starts accumulating on the date of the transaction.
And the worst thing is, that most of these transactions occur in foreign countries when cardholders are in their greatest need of local currency. There, customers can also expect to pay ATM fees and foreign transaction fees. If you end up making a small withdrawal, you could end up spending nearly as much in interest and fees as you received. When traveling, your best bet is often to use your ATM card, which lacks most of these charges.
These two similarly marketed products are actually quite different. The American Express Clear card is a rewards card with a 1% return that drops a few common fees. But American Express more than makes up for these fees in other ways, such as higher interest rates.
The Citi Simplicity® Card does not have rewards, and it’s interest rate structure is certainly more forgiving of an occasional late payment. But when you consider the superior promotional financing offers, the Citi Simplicity® Card becomes the obvious choice for those who already have some credit card debt and are looking for a break on their interest payments.
That leaves the American Express Clear card to be the favorite for those who almost always pay their balance in full and on time. These cardholders can get a year’s worth of free financing on new purchases, earn some rewards, and pay no annual fee.
A simple card is a great idea, but the one you choose will have more to say about your credit card usage than the merits of either product.
What are your thoughts on these two credit cards? Leave a comment!
All posts by Jason Steele