Dual/Companion Credit Cards

June 25th, 2010

Credit card providers have recently introduced dual credit cards for customers. So apart from having your normal MasterCard or Visa you can now be offered additional cards like American Express as companion credit cards.

Dual cards are being made available to customers by the four major banks in Australia. Commonwealth, ANZ, Westpac and NAB.

How Do Dual Credit Cards Work?

Normally when you are approved for credit from a credit card lender, you receive either a MasterCard or Visa card. But when the provider is offering dual cards, you will get an American Express card on top of your regular card.

Companion credit cards share the same credit limit, and you are only charged one fee as this is treated as one account. Any funds you use are taken from the one credit limit. The biggest advantage of these dual cards is that you are quickly able to accumulate rewards points.

You will find that most of the lenders that provide dual credit cards increase your points when your American Express card is used rather than your other card. You are still able to accumulate your normal points when using your MasterCard or Visa. The difference is that by using your American Express card you could earn 1.5 or 2 points per dollar spent, whereas with MasterCard or Visa you just get 1 point per dollar spent.

Disadvantages to Consider

Whilst being able to earn maximum points is useful, getting carried away with your card just to acquire points can be financially dangerous. American Express companion credit cards are more expensive than other cards. Even though you are only charged the one annual fee, because it has American Express attached to it, the fee will be higher.

Another drawback is that if you don’t pay your balance in full every month you could be penalised. You will find that American Express rates are quite a lot higher than interest rates on MasterCard and Visa.

The only way to avoid the high interest charges on American Express is to pay your outstanding balance in full each month. Most credit cards offer up to 55 interest free days, which gives you a bit of time to make your payment.

Overall there are more advantages than disadvantages to owning dual credit cards. Just be cautious about maximising your rewards points, even though having both types of cards provides a way to gain points at a much quicker pace.

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