American Express Travel Related Services' country-manager (India & area countries), Sanjay Rishi, today unveiled a credit card that will not only reduce the outstandings for other issuers, but also facilitate locking into "floats"--yearly returns in the 22-24 per cent band. All this while staying out of the Visa and MasterCard settlement systems!

"It is the best deal that customers could have got", Rishi said while holding forth on American Express' bright idea, one that enables existing credit card holders to transfer their balances at a monthly interest rate of 1.45 per cent, lower by half compared to the monthly 2.70-2.95 per cent charged by other players.

While the monthly interest of 1.45 per cent is only an introductory offer valid for six months beginning this November, cardholders still stand to gain handsomely as even after expiry ofthe up-front sop, it will still be at a monthly 1.99 per cent.

"ATM accessibility has been taken care of with an alliance with HDFC Bank", Rishi said, while mentioning that American Express will also activate it's own soon. A campaign is also on to sign up new card accepting locations across the country.

American Express offer is the output of a win-win strategy. While cardholders can have their outstandings cleared up at almost half the interest cost, the company gets to keep the "floats". Of course, this is assuming that other card issuers like Citibank, Standard Chartered Bank, HongkongBank and ANZ Grindlays Bank don't drop rates.

Interest rates on credit card outstandings are sensitive, and industry watchers say that other players will now have to rework their charges southwards, and brace themselves to operate on thinner margins.

Rishi though preferred to skip this aspect: "I would not like to comment on others or how they will react". But react they will, for higher the interest differentialremains, it is all the more attractive for cardholders, especially the heavy spenders, to shift loyalties to American Express, enabling it to get a yearly return of over 20 per cent (based on the monthly interest rate charge at 1.99 per cent).

All this does not mean that American Express, may in the bargain, end up with bad exposures, and customers with an eye only on reducing their card outstandings, affecting card-throughput in the long-run. Rishi says, "You got to become an American Express cardholder, not just come in and reduce your exposure".

American Express is now in a position to offer a package that includes travel related services across 29 cities with credit cards that complement its green and gold charge cards, corporate-cards, and an ATM network with the alliance with HDFC Bank.

To become an American Express credit card holder, all it takes one is a yearly packet of Rs 1 lakh, and an annual fee of Rs 995. There will be no entry fee. A free supplementary card will be on offer for thosesigning up before 31 January '99, after which the same can be availed of at Rs 495. Add-ons include a rewards programme, and insurance cover at Rs 10 lakh for air-mishaps with Rs 2 lakh in other cases.