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