A word of warning folks, read the fine print when you get one of these notices. I took a few moments to read AMEX’s most recent update- which of course is meant to be better for me – but in reality only backs us into a corner further. The most poignant piece of this update in terms was the DEFAULT INTEREST RATE which says that if you have one late payment- just one – they can default my interest rate to 27.24% (prime plus 23.99%) for a MINIMUM of Six MONTHS!!!! At their sole discretion of course. The same default rate applies if you bounce a check as well. They are definitely not on your side like Nationwide…

The solution: enroll in their automated payment system which will take the minimum payment from your checking account automatically thereby avoiding the issue of late payments altogether. Be sure to add over-draft to that checking account because bouncing a check will result in the same 27% interest rate being applied for six months. I’ve dealt with AMEX on the phone and let me tell you, they are not accustomed to working with people and any company that would bang you for a minimum of six months because of one late payment might need to be avoided…. if the were the only one. Sadly, this is common.

Might sound like they are here to help in the advertisements, but trust that if you are having trouble, they’re not going to bail you out. It’s just not in the business model. During the economic crash we saw in 2008, I received what could only be called a “margin call” from AMEX. Here’s how the conversation went:

AMEX: Good afternoon. This is AMEX. We need you to make a payment today.
Me: The bill isn’t due until the 15th and I am current.
AMEX: How much of a payment can you make today?
Me: Did you hear me? The bill is not due.
AMEX: How much of a payment can you make today?

They never faltered from this same line. I was both pissed off and disgusted at the same time. Their strong-arm tactic wasn’t for the weak-willed and I’m sure they made thousands of calls that week. What I didn’t realize was that their fiscal quarter was ending and it was an attempt to shore up their cash position. Bet it worked, but it made me vary wary. A word to the wise: be ready to make a payment at any time if AMEX is your main source of credit.

Pay your bill on-time, set up auto-draft to avoid late payments and have enough to cover this payment at all times!

Everyone has heard it before… we don’t accept AMEX here- the rates are too high. This is usually in response to someone charging a three dollar latte at the local coffee shop.  Let’s do a little comparison to show how foolish this decision is:

The business in question is a small local market that sells coffee and breakfast. Let’s figure that they do $5000 in gross monthly sales via credit cards. We’ll work with Visa first.

• 2% discount rate = $ 100 monthly in discount fees
• 20 cents per transaction. Let’s assume that their average ticket is $9. That means the store has approximately 555 transactions montly for an additional $111 per month.

Total fees exclusive of machinery, chargebacks, etc.: $211 per month.

Now for American Express:

• 3.25% discount rate =  $162.50
• No per transaction fee; instead pay $6 per month all inclusive

Total: $168.50

Someone please explain how a business should not accept American Express given the metrics? Talk about shooting yourself in the foot.

It’s even worse when the numbers grow. What I have found is that because of the per-item charges, the total percentage between discount and per-item fees approaches 9% using Mastercard and Visa’s fee system. That’s ridiculous. It should be the other way around- we don’t accept visa or mastercard. Unfortunately, business dictates that you must since checking accounts all use visa/mc for their debit transactions and it’s better to pay a few bucks to get the business….

So to all you business owners who do not accept AMEX, you are losing a tremendous amount of business and paying more to exclude AMEX patrons. WAKE UP!!