Reviews

Review: American Express Essential credit card

By Chris Chamberlin, March 30 2016
American Express Essential credit card
Notes
The Good
  • Earn points with Virgin Australia, Singapore Airlines and 6 others
  • Variety of insurance coverage
The Bad
  • Lower points earning rates than many paid-for cards
Added Value
  • $0 annual fee

Introduction

Fancy a credit card that can earn frequent flyer points with eight different airlines including Virgin Australia and Singapore Airlines, has no points capping and boasts insurance cover for your smartphone and other purchases?

Meet the American Express Essential credit card, for which you won't pay $200/year, or even $100 – this card is completely free of annual fees, and with low minimum income and minimum credit limit requirements, could easily be slipped into your wallet.

American Express Essential credit card: fast facts

  • Grade/tier: Standard/entry-level
  • Card type: American Express
  • Loyalty program: Membership Rewards Gateway (MRG)
  • MRG points earned per dollar (everyday spend): 1
  • MRG points earned per dollar (utilities, government providers and most insurance companies): 0.5
  • 1 MRG point = 0.75 frequent flyer points with: Virgin Australia Velocity, Cathay Pacific Asia Miles, Emirates Skywards, Etihad Guest, Malaysia Airlines Enrich, Singapore Airlines KrisFlyer and Thai Airways Royal Orchid Plus
  • 1 MRG point = $0.0075 Air New Zealand Airpoints Dollars
  • Points capping: Uncapped

Fees, charges and interest:

  • Annual fee: $0
  • Supplementary cardholder fee: $0
  • Interest rate on purchases: 14.99% p.a.
  • Interest-free days on purchases: Up to 55
  • Interest rate on cash advances: N/A
  • International transaction fee: 3.0%
  • Minimum income requirement: $40,000 p.a.
  • Minimum credit limit: $2,000

Earning points for free flights:

When you're already saving money by paying no annual fee, earning points for free flights on top of that proves icing on the cake: but compared to fee-carrying cards, you'll naturally earn fewer points per dollar and will need to spend more before unlocking a free flight.

Assuming you convert your points to Virgin Australia Velocity and under the revised Velocity award rates that come into play from June 1, a one-way economy flight from Sydney to Melbourne is yours after spending $10,400 on everyday purchases or $20,800 with utilities and the other reduced earners, plus a small amount in taxes and surcharges when booking the flight.

Just keep in mind that some retailers do levy a surcharge for American Express transactions, and while many apply the same surcharge as for Visa and MasterCard or even have no surcharge at all such as Woolworths and Coles, you'll want to check that the numbers are in your favour before paying a fee to use the card.

Airport lounge access:

We'd not expect a free card to deliver any airport lounge perks, and accordingly, these aren't included.

Complimentary insurance coverage:

As with airport lounges, insurance cover also isn't something we'd expect to see on a $0 card, and while travel insurance is rightly absent, the card offers purchase protection, buyer's advantage, refund protection and smartphone screen insurance.

Among the perks, you may be covered if an item bought with the card is stolen or broken within 90 days of the purchase, if a merchant refuses a refund on a new item within 90 days of purchase, for up to $500 of smartphone screen repairs if paying for the phone or contract with the card and may enjoy an extra 12 months of warranty cover on selected new appliances.

American Express Essential credit card: the verdict

With no annual fee, free insurance coverage and the ability to earn frequent flyer points on every dollar spent, the American Express Essential credit card comes with a well-rounded offering tailored to 'everyday' people.

For starters, having no annual fee allows people who might traditionally use Visa or MasterCard to give American Express a go and establish where it's accepted in their usual haunts, and can later switch to an AMEX card with a higher earning rate if desired.

A minimum income requirement of just $40,000 also puts it within reach of most full-time workers, challenging the common perception in years past of American Express being a premium card only for the high and mighty.

But before applying, also take a look at the American Express Velocity Escape card: also issued by AMEX with no annual fee, but which serves up one Velocity point per dollar on everyday spend and two Velocity points per dollar when booking Virgin Australia flights, which could boost your balance further for the same zero cost.

Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!

Jono

Jono

Qantas - Qantas Frequent Flyer

25 Jan 2013

Total posts 246

I think the smart phone screen insurance is a good selling point, (although I've not experienced the claims process myself), as is the $50 account credit.

However, I agree that the free QF and VA cards may be better value. They are also zero annual fee cards and deliver 1 point per $1 on every purchase, (not just eligable purchases). 

I also still think having Membership Rewards 'Gateway' as the third rewards system, (refering to Acent and David Jones,) is somewhat complexing. I get the business case for it, but think from a consumer perspective it would be simpler to have one 'Membership Rewards' as IMHO it's misleading to call all three programs Membership Rewards.

david_legge2786

david_legge2786

Qantas Frequent Flyer

13 Mar 2015

Total posts 8

Hi team - would these articles get updated due to the changes which American Express announced? Thanks :D

Chris Chamberlin

Chris Chamberlin

24 Apr 2012

Total posts 2949

Hi David, as a rule we generally don't go back and update all our old articles when something changes (if we did, that'd be a full-time job in itself), so all content on AusBT carries a 'publication date' seen at the top of each article, and content is believed correct as at that date.

However, any future AMEX credit card reviews we publish (including new reviews of existing cards) would no doubt have the latest information included, and would replace any previously-published reviews of the same cards.


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