| I am a former American Express employee. I | | | | they receive a payment. You are astonished. |
| worked for the company for eleven years, from | | | | "I thought this card didn't have a credit |
| 1990 to 2001. I then returned last year for a | | | | limit". Your bill isn't even due, you just |
| very short stint (about two months-couldn't | | | | received it in the mail three days ago. |
| handle it- they hired me for collections!) I | | | | |
| will certainly never bash them or bad-mouth | | | | The poor rep on the phone has to explain to |
| them. They are an excellent company to work | | | | you all of the things I mentioned above |
| for. | | | | (payment history, CBR score, debt to lending |
| | | | ratio, etc…) Now you are furious |
| From my experiences there, I have come to | | | | because this is the only card you intended to |
| realize that many people could use some | | | | use to run your business. |
| education about how the American Express | | | | |
| Charge card products work. A charge card | | | | To make it more complicated, you can also |
| isn't like a credit card. A charge card must | | | | have a revolving account attached to your |
| be paid in full every 30 days. This is great | | | | small business account, which allows you to |
| for people who have a good deal of money in | | | | have a line of credit to be used for some |
| the bank, or those who own small businesses. | | | | purchases. And, guess what? Even if you pay |
| The advantages of using the American Express | | | | the charge card portion of your account on |
| card as opposed to just using your bank debit | | | | time every month, if Amex deems that your |
| card are: | | | | revolving balance has become too high, you |
| | | | can still receive that phone call. |
| All kinds of great points going towards | | | | |
| incentives Extended warranty protection on | | | | The bottom line for small business accounts: |
| purchases (yes, even cars). You get to keep | | | | if you intend to spend at least $150,000 per |
| your money in the bank for an extra amount of | | | | month, they strongly suggest you go ahead and |
| time. They send you a statement at the end | | | | give them your financials. Meaning, if you |
| of the year if you have certain types of | | | | have that much in liquid assets, provide |
| accounts (gold, platinum, small business) | | | | proof. You don't want to run into an |
| that will help you when you get ready to file | | | | embarrassing situation if you can avoid it. |
| your taxes. This way you can have the | | | | God only knows how many times I got chewed |
| expenses organized in one account. The list | | | | out for things like this. But if you don't |
| goes on. | | | | intend to spend that much, say you want to |
| | | | spend $10,000 a month, you may have to build |
| But, exactly how does a charge card work? How | | | | your way slowly over the space of a few |
| do you know how much you can spend every | | | | months (maybe three or four) by demonstrating |
| month? This is the mystery question. This is | | | | that you have the ability and the good |
| what this article is about. | | | | intention of paying back smaller amounts. For |
| | | | instance, you spend $2000.00 the first month |
| A charge card doesn't have an established | | | | and you pay it back in full, on time. The |
| line of credit. A big gray area. At American | | | | second month, you spend $4000.00 and do the |
| Express, your ability to charge is based upon | | | | same, and so on. You steadily build your |
| a few factors. The first one is your | | | | ability to spend without interruption. And |
| established payment and spending history with | | | | yes, there are some card holders who can |
| the company. If you're new, you don't have | | | | spend $10,000 the first month, without being |
| one. So, after that, the next consideration | | | | questioned. That is solely based on all of |
| is your FICO score (or CBR score). It's a | | | | the factors I mentioned above (CBR score, |
| number between 350 and 830. The higher you | | | | debt to income ratio, etc…). |
| are to 830, the better you are as a credit | | | | |
| risk. And last, your debt to credit ratio. | | | | There's also the option of pre-paying the |
| This means, how much of the credit that's | | | | account if your account is fairly new. Yes, |
| been extended to you have you already used. | | | | we had customers who had the money (and were |
| Are you overextended already? American | | | | smart enough) to figure out that if their |
| Express will know that. | | | | account was very new, they could send us |
| | | | $75,000 and charge that much and more. |
| Do you have a mortgage and you think that | | | | Understand that with a charge card, you are |
| proves you're a good credit risk? Wrong. If | | | | building a relationship of trust. It's not a |
| you have a mortgage, American Express | | | | nickel and dime sort of account. If any of |
| considers you a greater credit risk because | | | | this frightens you, I'm doing you a favor. |
| of your large monthly debt. | | | | There is tremendous prestige in having an |
| | | | American Express account, specifically a |
| You're a small business owner. You have one | | | | charge card. American Express also treats |
| of those "Open" accounts from American | | | | those who maintain their relationship in good |
| Express. Your first month, you charged | | | | standing very generously. They highly expect |
| $10,000 and paid it back in full within the | | | | that you will be doing business with them for |
| 30 day grace period. The next month, you've | | | | the next twenty or thirty years (and many |
| already got a balance of $30,000 and suddenly | | | | customers do). So learn the rules and you can |
| you get a phone call from American Express. | | | | do well with your account, whether it's to |
| They are politely advising you that you can't | | | | run your business or personal use. |
| put any more charges on your account until | | | | |