AMERICAN EXPRESS SAUDI ARABIA
INTEREST-FREE CARDS
FREQUENTLY ASKED QUESTIONS
December 2015
Put yourmind at ease
American Express Cards in Saudi Arabia
are now Shari’a compliant
Table of contents
Section
Page
1
Overview of the Interest-free card
3
2
Overview of fees and charges
7
3
Customer migration process
11
Overview of
the interestfree card
Section 1
Overview of the interest-free Card
Why is American Express moving towards Shari’a compliance?
• In view of new regulations governing our target status of becoming a Closed Joint Stock Company by the
beginning of 2016, American Express Saudi Arabia will convert all consumer card products to become
Shari’a compliant.
• The move to Shari’a compliance will be accompanied with several product enhancements, ensuring that
your experience becomes even better.
How does my Islamic CREDIT Card work?
• The American Express Interest-Free Credit Card works under the Shari’a conditions applicable on service
fee.
• Under this model, the Card does not carry interest, commission or finance charges on the outstanding
statement balance.
• The Card continues to give you the flexibility of repaying your statement balance at your own pace.
However, a minimum of 5% of the statement balance amount (including any overdue or over limit amount)
must be repaid every month.
• A fixed monthly service fee will be charged on the card irrespective of the outstanding balance. For
example, a Blue Card customer would pay SAR 300 whether he revolves on SAR 2,500 or SAR 25,000.
• The fixed monthly service fee will be waived where the customer repays the full statement balance
amount on or before the due date.
How does my Islamic CHARGE Card work?
• The American Express Interest-Free Charge Card works under the Shari’a conditions applicable on
service fee.
• Under this model, the Card does not carry interest, commission or finance charges on the outstanding
statement balance.
• The Card allows a grace period of up to 25 days for you to settle the full outstanding amount.
• The Charge Card carries a fixed monthly administrative fee, which may be waived in full if the outstanding
statement balance is made by you on or before the due date.
Section 1
Overview of the interest-free Card
How will my new card differ from the conventional Card?
The American Express Interest-Free Card does not carry interest, commission or finance charges on
outstanding balance. It complies with the Shari’a guidelines and below is a summary of the key differences
between the interest-free card and the conventional card:
Conventional Card
Interest-free Card
Charges variable interest/ commission/ finance
charge based on outstanding balance
Charges fixed service/ administrative fee
irrespective of outstanding balance
Charges late payment. Considers this as revenue.
Although Late Payment fee is considered as
interest, Shari’a scholars allow the fee to be
charged to discourage late payments.
This late payment fee is not accepted as revenue.
Donated in full to a SAMA certified charity under
Shari’a Board supervision.
Customer terms and conditions not certified by
Shari’a scholars.
Terms and conditions certified by Shari’a Board to
be free from riba/ interest and fully compliant with
Shari’a.
What type of Shari’a compliant products will American Express
offer in KSA?
American Express will move all existing consumer Credit and Charge Card products to Shari’a compliance.
Section 1
Overview of the interest-free Card
Who determines if my American Express interest-free Cards are
indeed Shari’a compliant?
• American Express Saudi Arabia has engaged an independent Shari’a Board comprising of qualified
Shari’a scholars of international repute, to assist in structuring, reviewing and monitoring all its products.
This Shari’a Board oversees periodic audits to ensure that all products are in full compliance with Shari’a.
The Shari’a Board is registered with SAMA.
• Our Shari’a Board members are:
• Sheikh Dr. Osama Saad Bahar, Ph.D Islamic finance
• Sheikh Dr. Salah Fahad Al Shalhoob, Ph.D Philosophy
• Sheikh Muhammad Ahmad Al Sultan, Masters in Fiqh
How can American Express, a global, conventional financial
institution offer Islamic financial products?
• American Express Saudi Arabia has engaged highly respected and qualified Shari’a scholars to assist in
the development, launch and subsequent supervision of its Islamic products so that customers can rest
assured that each product meets Shari’a guidelines. This independent Shari’a board and Shari’a Advisors
periodically audit all Card operations at American Express Saudi Arabia in order to certify that they are
indeed Shari’a compliant.
• American Express Saudi Arabia has revised its entire accounting setup as well as its Card management
system to ensure that we comply with Shari’a.
Overview
of fees and
charges
Section 2
Overview of fees and charges
What fees or services will be impacted due to conversion to fixed
fee structure?
The key difference in terms of fee/ charges is that you will no longer pay interest, commission or finance
charges based on outstanding statement balances.
You will pay:
The American Express Blue Card
A fixed monthly service fee of SAR 300
The American Express Gold Credit Card
A fixed monthly service fee of SAR 450
The American Express Platinum Credit Card
A fixed monthly service fee of SAR 900 / US$ 240
The Etihad Guest American Express Gold Credit Card A fixed monthly service fee of US$ 120
The Etihad Guest American Express Platinum Credit
A fixed monthly service fee of US$ 240
Card
The American Express Card
A monthly administrative fee of US$ 150
The American Express Business Card
A monthly administrative fee of US$ 150
The American Express Gold Charge Card
A monthly administrative fee of US$ 250
The American Express Platinum Charge Card
A monthly administrative fee of US$ 500
Centurion
A monthly administrative fee of US$ 1,000
For CREDIT CARD:
• The fixed monthly service fee will be waived where the customer repays the full statement balance
amount on or before the due date.
• All late payment fees collected will be donated to a SAMA certified charity under the supervision of our
Shari’a Board.
For CHARGE CARD:
• The monthly administrative fee will be waived where the customer repays the full statement balance
amount on or before the due date.
• All late payment fees collected will be donated to a SAMA certified charity under the supervision of our
Shari’a Board.
• All other services and charges will continue to be the same.
Section 2
Overview of fees and charges
Is the Shari’a compliant card more expensive than the old
conventional card?
For those customers that pay back the full outstanding amount before the due date, there will be no difference
in charges and payments made.
For credit card customers who revolve, the conventional card would levy interest, commission or finance
charge on the outstanding statement balance for the period from the transaction date to the statement date.
The Islamic card will not charge any commission based on the outstanding statement balance. However, for
revolving customers, the Islamic Card will charge the monthly service fee.
Calculating the APR as per SAMA guidelines, (and using annual fee as well as monthly service fee paid over
a full year), if the Cardmembers utilise their credit line in relation to the monthly fee, then the APR will be
reduced. APR comparisons between the new Card (with fixed fee structure) and the old Card (with interest/
commission), are provided:
The American
Express Blue
Card
The American
Express Gold
Credit Card
(APR calculated
based on credit
utilisation of SAR
25,000)
(APR calculated
based on credit
utilisation of SAR
40,000)
APR for
conventional
card
34.75%
34.93%
APR for Shari’a
compliant card
26.74%
25.56%
The American
Express
Platinum
Credit Card
The Etihad
Guest
American
Express Gold
Credit Card
The Etihad
Guest American
Express
Platinum Credit
Card
(APR calculated
based on credit
utilisation of USD
11,000)
(APR calculated
based on credit
utilisation of USD
20,000)
35.48%
35.37%
35.55%
27.77%
25.71%
27.89%
(APR calculated
based on credit
utilisation of SAR
75,000 / USD
20,000)
How can APR be calculated for Islamic cards?
The term APR is irrelevant for the fixed fee based credit card, since on these service fee based cards, cost
of borrowing is nil. Nevertheless, to meet regulatory requirements and to allow customers to compare our
cards with competitor cards, we calculate APRs based on the sum of all fixed monthly fees paid over 12
months plus the annual fee paid by the customer.
The APR calculated as above should not be confused with Interest.
NOTE: Annual Profit Rate is a term used to express the actual yearly cost of borrowing funds. In Saudi Arabia,
it is mandatory for all financial institutions to mention an APR based on a set of borrowing assumptions
provided by SAMA.
Section 2
Overview of fees and charges
Late payment fee is like interest. How can a Shari’a compliant
Card charge a late payment fee?
• Late payment fee is charged only to discourage Cardmembers from being habitually late in making
payments. The company will not keep the fee as revenue. In fact all late payments collected are donated
in entirety to charity, under the supervision of our Shari’a Board and independent auditors.
FOR CHARGE CARD
Will I be charged a fixed fee or administrative charge even when I
pay my dues in time?
• The administrative fee will be waived where the customer repays the full statement balance amount on
or before the due date.
FOR CREDIT CARD
Will I be charged a fixed fee even when I do not revolve on my
credit Card?
• The fixed monthly service fee will be waived where the customer repays the full statement balance
amount on or before the due date.
Customer
service and
migration
Section 3
Customer service and migration
Can I continue using my conventional Card and not migrate to the
new fixed fee structure?
• The Kingdoms new Finance Companies Law requires that all financing and credit Card related products
offered by non-banking financial institutions be interest-free. Therefore American Express will be
converting all consumer products to the new Shari’a compliant model.
Will the Card migration cause disruption to my card service?
• All conventional Cards will be migrated to the new product structure after providing you with at least 60
days of prior notification. You can rest assured that the migration will be done without any disruption
of service. In fact, you will be able to continue using your current plastic Cards as the same card will be
reconfigured in our systems to work under the new Shari’a compliant model.
Will my current plastic Card be replaced by a new Card for
migration to the new interest-free structure?
• No. You will not need to change the plastic card. All modifications to the structure will be made to our
systems, without any inconvenience to you.
Section 3
Customer service and migration
Will American Express block my Cards from being used at specific
types of merchants that deal in Shari’a repugnant activities?
• Your Card experience will not change since American Express Saudi Arabia, from its inception, has
adhered to a set of ethical corporate values and has refrained from allowing transactions with business
entities engaged in unethical activities.
• Beyond this, we advise you to demonstrate prudence and self evaluation whilst making Card transactions.
Will my credit Card limits be affected by the migration from the
conventional structure to the new fixed fee structure?
• The migration process will not affect credit limits assigned to existing customers.
Will American Express continue to provide insurance cover for
me?
• YES, The insurance product structure will change so as to comply with Shari’a guidelines but the end
benefits and protection offered remains the same as before. American Express will replace insurance
protection schemes with takaful (Islamic insurance) protection schemes.
Section 3
Customer service and migration
Who can I consult in case I need further clarifications regarding
the product?
• All queries related to the new product structure can be directed to our dedicated product migration
helpdesk. The email address for the help desk is [email protected]. Alternatively
you can contact our helpline (number on the reverse of your Card) to share your queries. Our product
experts will endeavor to respond within 2 working days and ensure that your queries are adequately
addressed.
• In specific instances where you need clarity from our Shari’a scholars regarding the Shari’a certificate
(Fatwa), appointments can be requested through the help desk or the call center.