I use a Visa that pays me 2% cash back on all purchases.
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AX must have improved since I dumped them back in '89.
Long story short: I moved out of state and stayed in a motel for one night.
Finally settled in once I reached my destination. Filed change of address notification and went about my business.
Never got the bill, forgot about it for (lots of stuff happening), got a notice about 4 months later that my bill was for $250. Called AX and got the worst treatment I ever experienced., Told them I was more than willing to pay the $30 but just drop the other stuff. The agent was abusive so I asked to speak to his supervisor. Was put on hold and when he came back he said he'd turn me over to a collections agency and said something like "nah nah nah nah nah nah". I seriously thought about flying out to their location and beating up the jerk.
Came back to LA about 5 months later and got a notice from a collections agency wondering how on earth I was on their list. They advised me to pay half and they would let it go away so as to not stain my perfect record. They also said they've never seen this done before for a $30 bill.
I have only one MC and that's it. I guess everyone has a story to tell. I hope mine was unique but I doubt it.
It wasn't long after that I worked for Safra Bank. Edmund Safra came from a dynasty of traders going back to the early days in the Middle East. He dealt in gold and other precious metals as well as rare coins and such. AX, in an effort to best him in some matter, defamed him so he took them to court and came this close to shutting them down for good. They had to take out a full page in the NYT and apologize to him. Right after, he opened an office right across the street from them.
That made me smile.
I use whatever is handy... but usually I'll pay cash. Use the CC and then pay off that amount ... or pay in the amount of the buy and then make the charge. Same same, etither way.
I gave some thought to the supposed 'perks' from using CC as you stated... extended warranty coverage, shipping insurance, etc.
Truth be told, I've yet to have a great exp with a CC company. IF they say 'yada yada', and it's either outright false, unfair, unjust, or they won't listen/work with me on a dispute, or issue, (they normally do not anyhow) and do as they will. Consequently, I'll not rely on their claims or perks for using their money vs. using my own.
In other words... those claims IMHO, fall upon deaf ears here.... given how they've done business in the past... with me. I've not defaulted on an account in well over ten years, been late once on one account... nearly 3 years ago, yet each and evrey CC I own, escalated my rates from below 7% to now at an avg of 14%!
One by one each co raised the bar, from the initial time frame of the govt's pursute of the current regiems crack down on credit card companies.
Invariably each one cited the 'current economic climate', and not myself as the reason. I guess getting govt bail out money, Am Ex, Chase, etc., wasn't sufficient.
Pack it up really well and tight... declare the value and keep the receipts, if there's a shipping descrepency.
aS for extended warranties? yeah. good luck with all that. If they ain't in business any more... who's responsible? Are they paying the shipping costs as well? Seeing as how most things we buy around here need shipping for fixing?
CC perks ain't all they're cracked up to be IMHO. Just another come on and another possible bag of wet hair.
I will say in a positive frame, even my banks now honor and investigate or withold outright, payment to any entity which has made false claims, or has not delievered their goods as stated. So at least Bank Am, and my Credit Union are now taking those steps they had not taken previously to protect the members funds... even if it's just a debit card purchase at POS or online..
I use my Amex whenever possible. The benefits are numerous:
Extended warranties, easy proof for insurance, great tracking, no limit, no payment games (I pay in full every month) and they give rewards points. The points aren't exactly cash back but I've never had trouble using them. I recently put a vacation on my Amex and the insurance they offered was cheaper than anywhere else and the coverage is good.
Some retailers hate Amex because it is expensive, so I do use other cards or cash at times.
I wrote a lengthy rave about AX late last night and then decided it was too much. My feelings have not changed, AX and Visa are my only credit cards.
Visa is used only if I MUST have something (out of gasoline) and the auto serve pump does not accept AX.
My AX gets more charged to in one week than the Visa does in one year.
Like Elevick I pay in full every month. I'm close to having no debt except for our home and one car and hope to keep it that way.
The card was probably an Amex card, most likely a platinum or black card. There may be other colors our wealthier A'gon members know of or possess. I know the Amex gold allows purchases up to about $10k, slightly more if you call and are approved. I think the platinum extends the ceiling to $50k and the black to $100k or more. I use my Amex card(just gold since I'm not rich) for the extended warranties (I think it still doubles the length of most warranties) and the handy reward points (I recently used these points to buy all supplies for a masterbath redo) and it keeps me from spending sprees since I know the full balance is due each month. Elevick is right about many retailers not liking Amex. Visa,Mastercard and Discover get between 1-2% of the purchase amount as a fee while Amex fees are 3%. Amex also charges cardholders a yearly fee - just because they can.
I'm curious what you find so attractive about the AmEx. Does it help for purchasing audio gear? Does it help for other stuff?
I'm considering applying for the AmEx platinum but frankly find the annual fee to be a little on the high side, so I'd want to make sure that it actually offers me something.
I came from the other direction, had Visa, MC and Discover and then signed up for AX.
About the time I was getting my photo business going strong. Chase, Bank of America, Capital One and others would wait for big balance and then change the rate to the max. I was paying way more than minimum and way ahead of the due date.
I had a bank line of credit, so I paid all of them off and cancelled each one. When I paid and called to cancel they begged me to stay but I was looking forward to destroying the plastic those crooks issued.
The first month I had my AX card my wife and I vacationed in Switzerland. We visited Sinar Bron and I found out they would sell cameras and lenses direct since I was there in person. Prices were less than half what stores charged in the USA. I needed them for my photo studio and bought a lot.
Next my wife found an expensive watch (Rolex). Again, less than half what it sells for in USA. When we attempted to purchase AX ask to speak to me from NYC. They spent only a moment on the line and then approved the purchase.
My wife loved me for that and I loved AX for not cutting me off when I was so far from home. We sold her old watch for almost enough to pay for the new one, a super deal.
I had the old original green card. AX ask me to get the gold one later and I accepted. Since then they have ask about the Platinum and some others but I just keep using the one I have.
Two years ago I had cash for a down payment on my car and when the dealership ask if I wanted to use a credit card, to my surprise it was accepted by AX.
I don't know what the limit is but the only time they hassle me is when I buy something on line in Japan, Korea or Australia and they will (sometimes) hold approval until they can check with me to be sure someone has not stolen my card.
I bought a Herman Miller chair for my office and the people in Chicago sent a defect. Yes it was a bargain but no value as it was. I returned it and requested a refund and continued to ask about the refund every week for nearly a month. I finally called them and they said:
"Too bad, it's been over a month now and you have to pay 15% restock fee, regardless of the reason."
I called AX, they issued a refund and wrote them up for being the scum bags they were.
Repeat story with a couple of camera vendors in NYC that attempted the same. Collect the money, promise to ship the next day and two weeks later they are still giving excuses. One call to AX and credit before I hung up phone.
The time that happened with Visa the credit card company requested I work with the seller and write a letter to them and they would take it under advisement. (Are you kidding?)
When I was doing Southwest Airlines Vacations magazine I was traveling constantly. In California I hired a guy that worked as a grip with a movie company to ride with me, helping me find locations and protecting my gear when my eyes were elsewhere.
Each day he ask to be paid in cash since I was from out of town, The local AX office cashed my personal checks every day in LA for over a week, hundreds of dollars a day even though my bank did not even have a branch in that state.
There are other occasions and other things, AX travel checks, insurance for rented cars in Europe and USA and of course the points. I bought a LCD TV and Canon camera with points last year.
Reciprocating for my being treated fair is so important, I sometimes walk out of places that refuse my AX card, even if I have enough cash to pay and a Visa in my wallet.
AmEx Blue Cash
No annual fee
0.5% on every purchase before spending $6500 (year period)
1.0% on every purchase after $6500
1.25% on gas, groceries, drugstores before $6500
5% on gas, groceries, drugstore after $6500
$6500 counts as total of all cards in a household.
Very few stores don't accept AmEx. Customer service is rated #1 (I agree) - you deal directly while in case of Visa you deal with a bank that represents Visa (two layers). AmEx is worldwide while banks might be local or different in spite of the same name. Citibank in Poland, for instance, is different from Citibank in US - same name and logo but no support.
Michael, I'll put it this way. When I dealt with our favorite guy to buy my first Jadis, he told me there were no refunds - I know this will shock you. So, I called American Express, and they told me not to worry about it. By using the card, my purchase was protected by them.
Obviously, I didn't return the amp, but on another occasion where I dealt with a merchant who wouldn't reverse a charge on not a small purchase, American Express immediately issued a full refund.
I'll contrast that with an event of buying something else a couple of years ago. The salesman of the store only took Visa/MasterCard told us to take it home and try it, and they would ensure the purchase was to our liking. In the end, I was stuck with the charge, even though the item was returned the next morning. The service Citi provided in the dispute impressed me in the worst of ways.
Even before that, I tried to use American Express whenever I could over Visa. The only reason I keep Visa, now with a different bank, is as a last resort.
Albert and Joe, thanks for the information on the AmEx. It sounds as if AmEx certainly does offer purchase protection and other perks that might justify its higher up-front cost.
Have any of you compared AmEx to the more premium Visa or Mastercards, though, like the Chase Sapphire or Visa Black? I take it that your comparisons of AmEx are to more plain-jain Visa's, rather than the premium cards?
I accepted a bank's offer of a Visa gold card due to the 0% interest for the first year. I transferred my balances from my other cards to it and that worked out well. But after the intro period they raised the rate to about 16% so I used the Amex card for larger purchases to avoid the usury charges.
After they charged me the $75 yearly fee one January, I reevaluated the benefits I was receiving for this fee and from the card. There were no reward points, extension of warranties or assistance with merchant disputes ike Amex provided. I no longer had any incentive for keeping it so I paid off the balance and cancelled it.
I think a lot of banks are issuing gold Visas and gold Mastercards in an attempt to emulate the Amex gold card's success and break into their market. They are wanting the additional revenues without adding any of the required costs that are needed to improve customer service, reward programs, etc. that actually increase the card's value to users. If you're attracted to the flexibility of making monthly installments, rather than your full balance each billing cycle, I beleive the Amex gold still allows you to do this with selected large purchases - you just need to call and arrange prior to purchase. I sound like a salesman but I have no affiliation with Amex. I;m just a satisfied customer and, yes, 'I never leave home without it', literally.
I've had good luck with Chase cash rewards credit cards...converting points into cash. But: I never keep any balances, don't pay any fees. So, now I received a letter stating that in order for me to continue to enjoy the rewards programme, I need to open a checking. Not interested because of their horrendous maintainance fees. Time to look for a new one then
"use of CC will only get more and more expensive."
Only if you keep balance, otherwise you gain money - cash back plus delay between purchase and CC due date. In addition you have CC protection that you won't have paying cash or by check. It is like any other tool - there are right and wrong ways of using it.
That cash you are getting back is built in, pre-paid, and I personally would not ever rely on CC protection as a reason to use a CC, but I do agree with you about carrying a CC balance. I used to agree that cards can be a tool, but not any more. This is not to be confused with a debit card which I find to be a much more useful tool. Since the banking melt-down CCs are looked at by the banks as a way to load up fees, and they have done a great job of it before the new regulations kick in to stop them. Next up on the chopping block will be free checking, and probably interest-bearing checking, as these are not funds the banks can count on as part of their lending reserves.
What do you mean by "built in" and "prepaid". My card costs me nothing while it gives me back about $1000 a year.
Debit card is not useful to me since it doesn't offer same protection credit card does (fraudulent use, identity theft etc.). I'm not afraid to use credit card over internet but I would not use debit card.
Any dispute, I might have with a store that sold me defective item or refused return is arbitrated by credit card company that applies back-charges first and then store has to prove the right to get my money. No such luck with debit card (same as cash), cash, check etc.
What?!?! You think they are really giving you free money? ;-) Most likely they are charging you in fees and then giving a small rebate to make you feel good about spending money you don't have. :-)
I'm not saying the debit card is a replacement for a cc, or vice-versa. All I'm saying is keep watching your card statements for new fees. If it works for you, and I can certainly understand from the POV of running a business, then that's great. People have been ripped off on both sided of cc transactions, so I myself don't place too much credence in the protection offered and do my own due diligence.
I've had various AMEX cards for at least 20 years. First a Gold, until I got tired of the $100 yearly fee. Then a (free) Blue card. I got points on both that I cashed in on Home Depot gift cards; I must have gotten at least $1200 over the years in both Home Depot, & Crate & Barrel, gift cards. Obviously, this is much better with a (free) Blue card.
There's also an AMEX card that pays 2% cash back, if you have a specific brokerage or IRA account.
Recently I've had a Visa card with 2% cash back. Like getting a 2% discount on everything you buy. There's also an Amazon Visa that gives triple points on everything you buy on Amazon, great for Amazon junkies.
From a few of the comments here tho, I think I might go back to using Amex for some expensive purchases.....
"Most likely they are charging you in fees and then giving a small rebate to make you feel good about spending money you don't have"
What do you mean by "most likely"? I know EXACTLY that they don't charge me a penny for many years while I'm getting almost $1k back every year. I addition I'm getting protection and a lot of other benefits. It would be silly for me to use debit card or cash instead.
From the responses I've received so far, it seems that overall American Express is the way to go if you anticipate some major purchases. Different people have advocated for different AmEx cards, from the Blue with no monthly fee to the Gold. Does anyone have the Platinum who could comment on whether the annual fee is worth it?
Dan_ed is wrong in a way and right in a way. He is wrong because you only pay your $100 for the $100 item. He is right, however, because the merchant who accepts Amex or Visa/MC pays a portion of the bill to the CC provider (and Visa/MC). For every $100 charged, the vendor only receives $96.5-97.5 (roughly). Amex charges 3.5% to the merchant. Visa/MC is low-mid 2% area to up to 2.7% I think. Discover is a bit less. (Gasoline and groceries are lower for almost all card providers). 'Point' cards generally cost a little bit more to merchants (in order to give you the points) but merchants suck it up because they like customers who like to spend. 'Vanity' cards (Amazon, Borders, etc) cost a bit more to merchants than point cards do. Credit card issuers have a clause in their agreement with merchants which says that merchants are not allowed to charge credit card users more than they charge cash users. Most merchants have traditionally honored this because they don't want to get cut off by the credit card service. Therefore they charge cash users a higher price than they should (in terms of trying to make the same profit off the same item). If credit card issuers only took 0.1%, then all store prices would eventually drift down (believe it or not, they would). We all pay for all of us to us credit cards. Stories about how the consumer was wronged (defective item, etc) have a backstory to them too. Someone, whether it is the bank or the merchant, lost money on that sale. The time and money it takes to make it right cost more than the profit which would have been earned had it been a clean, good sale. Reputation risk is a further issue. All in all, though, we all pay a little bit extra just so banks/Amex/VISA/MC can clean up the messes which occur from time to time. CCs have traditionally been very good business for banks because of the economics described below.
That 2.5-3.5% allows the the credit card company to bill you at the end of the month and not charge anything if you pay it by a couple of weeks later. That 'float' is "free" to you for that. If you use your card at precisely the right time, you can avoid paying for close to two months. If not, the average carry will be about 6 weeks. Banks are effectively lending short-term money at 2.5-3.5% every 6 weeks, which annualized is 20-30%. Banks have to deal with fraud, and statements, and mailings, and advertising, and other stuff within that amount, but it's still good business. Fraud runs 1% or something like that. Then, if you keep a balance, they will lend to you at that "high" rate of 14%.
You may think that is a high rate. But when you forget to pay, they have to send you reminders, more reminders, phone calls, chase you down, etc. all of which costs you money. You'd be surprised how little that 14% is worth. If you carry a $1000 balance, it's $140 a year. If you don't pay it and instead let it build, that might be OK. Once. Then it happens again. They send an automated mailing to you - cost of $1. No biggie. They temporarily turn off the card. You call the CC company to get it turned back on, and you say you will promise to pay. They turn it on with a small limit and you don't pay, and now they have to chase you down with a real person. That costs real money because the collection agency gets a chunk of the money retrieved. If the bank thinks they can't get anything from you, after they have spent money to retrieve it from you, they can sell your unpaid debt to someone else (usually a company with the ability to act themselves as a collection agency), usually for pennies on the dollar. When they sell your $1600 debt (original $1000+$70 of interest after 6mos, and $500 the next month+the interest on that) for $100, they have to make up the other $1500+other costs incurred from all the other guys who are carrying balances. With 10 other guys, they get $140 per guy a year in interest, but they have costs of lending that $1000 x 11 guys in the first place, and there are costs of being in business. They probably break even on 5% default, but they make quite good money at 2-3%.
When default rates are quite low (like 2004-2007), banks don't need to charge much interest on the balance. They get lots of money from catching the 2-2.5% on the purchase itself and the 7% on the balance lots of people run is just for keeping people honest. When default rates climb to 5%, suddenly, they need to charge EVERYONE a great deal more just to avoid losing their shirts on the 5% defaulting (in an economic downturn, people don't default on $100, they default on $5,000 or $10,000, whereas the people who carry balances in an economic downturn but DON'T default do their damnedest to lower them in order to avoid paying lots of interest. They also spend less (meaning the bank gets fewer 2% fees on your purchases).
Then there is securitization. And if you want to really ugly, we can talk about talk about ABCPs, funding putbacks, and FAS 167 and consolidation accounting for VIEs.
Are CCs 'worth it'? Because buyers "pay" 2.5-3.5% extra on every purchase, they get convenience, protection, perks, etc. Merchants get convenience and safety (usually), and possible cost-savings (if the bulk of the sales are in large sums, most small merchants would rather pay the 2.5% away to VISA so they did not have to hire an extra security guard, hire someone to deliver the cash (Brinks?), pay extra liability insurance premium to one's insurer (because cash balances tend to attract thieves who might do physical damage to the store or bodily damage to employees), etc). And banks earn decent profits on this because 300 million Americans spend a LOT of money by credit card and every little expenditure has a 2.5-3.5% slice taken out of it to cover fraud, 6 weeks of interest, advertising costs, service costs, 'insurance', perks, points, money back, etc, oh... and profit for the issuing bank and card company.
"I'll say it again, nothing is free"
Right you are, you pay for it. As T_Bone explained CC company charges store few percent to give me cash back (few percent) plus delay on payment and all other perks. Store has to raise the price by few percent but it is for everybody. Cashback I receive is possible because you pay few percent more in store getting nothing in return. Thank you.
As an update, largely on the basis of the recommendations of people in this thread, I got an American Express Platinum card nearly a month ago now. I'm currently in Singapore attending a conference, and I've already enjoyed the benefits of this card (access to airport lounges and no foreign currency conversion fees).
Thanks to all who recommended the AmEx Platinum.