Amex cuts limit on overdrafts in half

AMERICAN EXPRESS is halving the size of loans available to gold card holders, from pounds 10,000 to pounds 5,000, writes Vivien Goldsmith.

It is writing to card holders, but the letter to those whose borrowing are below pounds 5,000 does not include this crucial information. They have to ring a customer service telephone line to discover the difference between the old and new accounts. Borrowers who are already above the new limit are being asked to bring their overdrafts down to the new limit over a reasonable period.

John Peterson, vice-president of public affairs at Amex, said: 'In this difficult economic environment Amex Bank believes it is prudent to revise its policy on unsecured overdraft limits.'

When the gold card was launched in 1980 the overdraft rate was pegged to bank base rates and was a cheap way to borrow. It is now a 'managed rate', currently 1.74 per cent a month (22.9 per cent apr) on sums over pounds 5,000, and 1.78 per cent a month (23.5 per cent apr) on pounds 2,500 plus. There is also an pounds 85 annual fee on the gold card.

Customers are being asked to destroy any cheques and paying-in slips. Their old accounts are being closed, and new accounts with new cheque books will come into operation. The rate remains the same.

Lloyds Bank, which issues an Amex gold card to customers, said it had no intention of cutting borrowing limits.