American Express Personal Loan Review: Great for Consolidating Credit Card Debt

American Express Personal Loan Review: Great for Consolidating Credit Card Debt

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American Express personal loans are only available to current American Express cardmembers who have received a pre-approved offer. With that being said, we still think these personal loans can be a good choice for consumers looking to pay off credit card debt. This is because American Express lets you directly pay up to four personal credit cards, and there’s no impact to your credit score to apply for the loan.

American Express Personal Loan Review: Should You Apply?

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Provided you’ve received a pre-approved offer, we think an American Express personal loan can be a particularly great choice for consolidating high-interest credit card debt. While you can use these personal loans for other purposes, American Express lets you pay off up to four credit cards directly, and in some cases, applicants will only be approved to use the loan in this way.

  • Option to pay your off your non-American Express credit cards directly
  • No impact to your credit score to apply for the loan
  • Must be an American Express cardholder and receive a pre-approved offer
  • Cannot use funds for postsecondary educational, business, vehicle or real estate purposes

American Express is one of the few companies that will pay off your credit cards directly with a personal loan. In most cases, when you want to use a personal loan to consolidate debt, the lender will deposit funds to your bank account and then you will have to use that money to pay off your creditors. American Express, on the other hand, will send funds directly to up to four different personal credit card accounts. The only exception to this is that the American Express won’t directly pay their own credit cards. However, you can still use the loan proceeds yourself to pay off an American Express credit card yourself.

Because American Express personal loans are only available to cardmembers with pre-approved offers, you won’t have to undergo a hard credit check when you apply. This means there will be no impact to your credit score during the application and approval process. In contrast, many online lenders will let you check your rate without affecting your credit score, but will conduct a hard inquiry if you apply for a loan. If you accept a loan, American Express, like the majority of lenders, will report your loan activity to credit bureaus, so late or failed payments can have a negative impact on your score.

While American Express doesn’t make loans as large or for as long as some other lenders, the company has competitive interest rates. Annual percentage rates range from 6.9% to 19.98% with your credit score generally determining your maximum rate. When we checked rates for a borrower with a 759 credit score, the maximum APR listed was 8.98%. Compared to other companies with rates ranging up to 36%, you can get a good deal here.

Among the downsides to these personal loans are the low amount you can borrow and the short payback times. You can only borrow up to $40,000 for one, two or three years. For comparison, some online lenders make loans up to $100,000 with terms ranging from two to seven years. Another sticking point for some customers is that some applicants will only be allowed to use their loan to pay off their creditors directly. You must be approved to receive your funds to your own bank account. Because of this stipulation, these loans may be better suited for debt consolidation purposes.

Finally, American Express prohibits borrowers for using their personal loans for postsecondary educational, business, real estate, securities or vehicle purchases (except as a down payment on a vehicle). If you need a loan for your small business, American Express offers a similar business loan program for pre-approved business cardmembers.

Eligibility Criteria

To be eligible for a American Express personal loan, you must meet the minimum criteria listed below. We also recommend applicants meet the recommended criteria to improve their chances of being approved.

  • Must be pre-approved by American Express
  • At least 18 years old
  • U.S. citizen or permanent resident
  • Be primary cardholder on an American Express personal credit card
  • Have an online American Express account
  • Be in good status with American Express at time of loan application

American Express Personal Loan Rates, Terms and Fees

American Express makes unsecured personal loans up to $40,000 for pre-approved American Express cardmembers.

Loan Amount Range$3,500 - $40,000
APR Range6.90% - 19.98%
  • No origination fee
  • Late payment fee: $39
  • NSF/returned payment fee: $39
  • No check processing fee
  • No prepayment penalty
Loan Terms1, 2 or 3 years
Repayment OptionsMonthly
Direct Payment to CreditorsYes

Application Process

You can only apply for an American Express personal loan if you’ve received a pre-approved offer. You can check if you’ve been pre-approved by visiting the American Express personal loan page and signing into your online account. Once you login, you will be able to see the maximum amount and APR for which you have been pre-approved (if you have been pre-approved).

Application ProcessOnline
Time to Get Funds3-5 business days
Credit CheckSoft credit check to apply
Credit ReportingYes
Cosigners/Co-borrowers Allowed?No

You will then need to select how you want your funds to be disbursed -- either to your bank account or directly to your credit cards. American Express may not let you disburse funds to your bank account depending on what you’ve been pre-approved for. After you select your disbursement method, you can tell the company how much you actually want to borrow (it cannot be higher than the maximum for which you’ve been approved), and choose a repayment term of one, two or three years. During the application process, you won’t have to go through a hard credit check. If you are approved, funds will be disbursed within three to five business days after you sign your loan agreement.

How Does American Express Personal Loans Compare to Other Loans?

If you’re in the market for a personal loan, it pays to shop around to get the best deal. We take a look at some of the competition below.

American Express Personal Loans vs. Discover Personal Loans

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Discover and American Express offer nearly identical personal loan products, with a few minor differences. Discover, for one, doesn’t require customers be pre-approved to apply -- anyone, regardless of whether they have a Discover credit card or financial product, can apply for a personal loan. Discover also has a slightly higher range of rates than American Express, but for borrowers with good to excellent credit, the difference between rates will likely be insignificant. Finally, Discover lets you pay back your loan over a longer period of term, letting borrowers select terms from three to seven years. Like American Express, you can also pay your creditors directly, making Discover a good choice for debt consolidation.

American Express Personal Loans vs. LightStream

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LightStream makes personal loans up to $100,000, so we recommend it for borrowers who need more than American Express can offer. LightStream generally caters to borrowers with good to excellent credit and financial history, but this means the lender can offer lower rates, better terms and fewer fees. To improve your chances of being approved, we recommend borrowers have credit scores of 660 or higher, significant retirement or other savings, a low debt-to-income ratio, a variety of credit or loan accounts and several years of credit history. LightStream is the completely online lending division of SunTrust Bank, so there’s a trusted name behind these personal loans.

American Express Personal Loans vs. Payoff

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Payoff only makes debt consolidation loans, so it’s worth considering if you need to pay off credit cards and don’t have a pre-approved offer from American Express. Rates at Payoff are a little higher than those at American Express, but you can borrow more and pay back your loan over a longer period of time. Qualifying at Payoff is straightforward: you’ll need a FICO score of 660 or higher, a debt-to-income ratio under 51%, three years of credit history with at least two current accounts in good standing, no current delinquencies (and none greater than 90 days in the last 12 months) and no more than one installment loan in the last 12 months.

Madison is a former Research Analyst at ValuePenguin who focused on student loans and personal loans. She graduated from the University of Rochester with a B.A. in Financial Economics with a double minor in Business and Psychology.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.