Whats the deal with Amex... Why are they seen as the 'elite' charge card, but why don't all retailers accept them, etc. Are they worth getting in general??
It all depends on what you need... Personally I have a CC from my Bank on which I earn airmiles which will let me chose from a 100 airlines. The way I see it, I have to pay my bills regardless so I might as well get something in return. There are a ton of CCs out there and it all depends on your life style and your comfort in paying it off asap - you should do your damnest not to carry a balance. Capital One must be one of the most popular due to their low interest rate ( avg here in .ca is 18.9% annually ); though most banks offer low interest cards as well but they don't advertise them. A short while ago I heard some chap at a bank say that the banks don't make money from CCs due to the # of fraudulant transactions - after thinking about it for a bit it made sense as most fraudulent transactions run into the 100's if not 1000's of dollars. Case in point - I a few months back I tried to use my CC on ebay and it was denied - now I carry a nil or very low balance so I thought this to be rather odd - I tried again and got the same message. I called the CC center to inquire and was asked about $1000 worth of transactions in two online poker places - as I don't ever gamble online they shut the card down and reimbursed me the money, but still - a $1000 out of the banks pocket. But I digress - what card is right for you? Research - google is your best friend
It's not an elite card unless you have the black one. Most retailers I work with who don't accept American Express do it because the fees that Amex charges the business per transaction are much higher than what Visa or MC will charge. For Visa and MC, it's about 3% of the transaction amount. For AMEX, I think it's about double that. AMEX tries to counter that with, "But the average AMEX holder will spend more money than the average Visa or MC holder", but many business just don't buy that. If you have an AMEX, odds are you have a VISA or MC already too. That doesn't sound like much, but in certain industries/locations where the profit margin is slim, it makes a difference. Personally, unless you like annual fees and high interest rates, I don't think AMEX is worth it.
American Express was the first in the credit card field (1958, I believe?) and, being the first, enjoys a certain aura of prestige. Now, that said, the American Express card has no spending limits but the balance must be paid off at the end of every month. Visa (formerly known as BankAmericard) and MasterCard (formerly known as MasterCharge) are virtually indistinguishable other than for the fact that Visa was established by Bank of America while MasterCard was founded (1964, I believe?) by a syndicate of fourteen banks led by Wells Fargo Bank. Both Visa and MasterCard are issued through licensing agreements with banks, both have pre-set spending limits, and both allow you to carry a balance and make minimum payments on the debt. The major marketing mistake American Express made was not pursuing licensing agreements through banks and that caused them to start losing market share to Visa and MasterCard. Also, because American Express does not allow you to carry a balance and make minimum payments, they do not earn interest income. (I say this with the qualifier that, fairly recently in terms of the company's entire history, American Express has begun offering a minimum payments card called the Optima card.) Therefore, American Express charges a higher annual fee (two to three times higher than Visa and MasterCard) and a higher merchant discount (twice as much as Visa and MasterCard). But, American Express positions itself as being much more prestigious because you need a much higher minimum income to qualify for their card than one would need for the more humble and pedestrian Visa, MasterCard, or Discover.
Re: Re: American Express I have 2 AMEX Platinum cards with with high credit limits, and my graduate assistanship salary is $15,000 a year.
Every year, I am a guest speaker at a seminar at our local medical school. The seminar is for the fourth-year residents and covers some business and financial topics that new physicians need to know about when entering practice. My lecture is on malpractice and insurance. A couple of years ago, I was chatting backstage with a banker who was there to talk about financing a new practice. We were discussing a recent article in Medical Economics about a physician who used his Amex card to buy a $ 125,000 piece of medical equipment, and got something like a bazillion air miles as a result. I was telling her that I only used two credit cards: a Visa for personal and a Amex for business. The Visa card contributes 1% of purchases to my REI dividend and the Amex card contributes 1% of purchases to a Costco credit. I cannot use air miles due to all the blackouts and my schedule, but I can always find something to buy at REI or Costco. I told her that I paid off the cards in full every month, they had no annual fee and so I thought they were a great deal. She laughed and told me that bankers had a word for people like me: deadbeats. I told her that I had never missed or had a late payment in my life! She went on to explain that the reason why I was a deadbeat was that the banks made no money off me in interest, annual fees or late charges, and indeed lost money on me with the rewards program. A very interesting comment, I thought.
My wife and I only use our amex cards, we have a gold, and a costco one. The sweet thing about the costco amex, is a it will let you hold a balance and B. it gave me a sweet deal on transfer balances. Just so you know, if ANY ONE ever tries to make you pay a service fee for using visa or master card, or any other credit card, report them to Visa/MC they are NOT allow to charge a fee or a minimum balance. Unless its the state or the City they can.
Re: Re: Re: American Express Did you get the Amex cards while you had a relatively high-paying regular job (or as a business owner) or did you get the Amex student card and eventually trade up to the platinum?
I applied for the AMEX Delta Skymiles gold card just for the miles while still a grad student. Then, AMEX called me on the phone asking me if I wanted to upgrade to platinum. That came with a high annual fee but they gave me a ton of miles. Then MNBA called me and asked if I wanted a no annual fee AMEX, and I said sure, since I was going to cancel the high annual fee card. Now I have AMEX calling me if I want to apply for the business AMEX card. I told them, "But I don't have a business." to which they replied, "That's okay. You can get the card now and start one later." ?????????? I'm hoping all this attention is a sign of my future earning potential after I graduate!
While I was a young and broke graduate student in the 1980s, I applied for and got the American Express Student Card, but was asked to clip it up and return it after about three years. After going into the work force, I applied for and got the too-easy-to-get Optima Card while still a humble drill press operator and volunarily clipped that one up and threw it away, also after three. Later, while running my own tutoring service, I applied for the American Express Corporate Card and was turned down cold. Apparently, Amex wisened up. And so did I. To this day, after three rounds of credit card debt, I carry no plastic.
It's almost impossible to get a high credit rating without having plastic. The most optimum credit situation is to have high credit limits and zero balances. This equates into low utilization and higher scores.
