NEW YORK -- American Express Co., after months of in-house study and debate, is expected to introduce a revolving credit card Tuesday, a bold step in the company's planned expansion into consumer lending, sources said late Monday.
The new card -- called 'Optima' -- will be made available to American Express cardholders who have been members in good standing for at least one year.
The new 'Optima' card will offered with a 13.5 percent annual interest rate, that will be evaluated every six months, the sources said.
American Express currently offers only 'charge' cards. They differ from credit cards offered by such firms as Visa and Mastercard in that balances must be paid every month.
American Express has approximately 23.8 million cards in force. Charge volume totaled an estimated $63.6 billion in 1986.
Eligible cardholders can expect to receive the new card in May, the sources said.
American Express officials were unavailable for comment Monday.
The company first mentioned the possibility of introducing a credit card in its 1985 annual report.
'American Express Centurion Bank, chartered in Delaware and issued by the FDIC, will begin offering lines of credit early in 1986, principally to selected cardmembers,' the company wrote in the report.
American Express Centurion Bank was established in 1985.
In a meeting with analysts a few weeks ago, American Express Chairman James D. Robinson indicated that the company felt it was time to move more heavily into the area of consumer lending, sources said.
Analysts said Monday that the 13.5 percent interest rate attached to the new American Express credit card could keep the pressure on banks to lower their interest rates, which have seen a decline in recent months.
Money center banks, who are the largest issuers of credit cards, charge interest rates that range from about 17.5 percent to the 20 percent rate on their Visa and Mastercards.
