looking for an education

American Express forum. Talk about AmEx credit cards like Blue, Gold, Platinum, Centurion, and more.
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looking for an education

Postby Kaiokenryu » Tue Apr 08, 2014 10:49 pm

amex charge cards have no interest b/c they are PIF

amex revolvers have interest b/c they are not PIF

I've read that amex doesn't like it when you "carry a balance".

I get the math: no risk plus swipe fee = big money


IS this really how they feel about thier revolvers......they would make a killing off of consumer-minded people who buy "things" with lets say......Amex Everyday Card.....and carry a balance while paying more than minimum. ( we won't even entertain min. payment users)....250K cardholders paying 10 per month interest (just as a random figure) is sweet money.

but if revolver holders use their card like charge cards.....they make "less money" because the interest is cut out.

WE all know that carrying a balance bad...but my question is can swipe fees make up for the interest that they would not be receiving if the cardholders are tenacious in financial mangement? which is the gravy and which is the potatoes?

and for my edification...what is a typical interchange fee for Amex?

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Postby swipe_masta » Wed Apr 09, 2014 2:38 am

This applies to every card not just Amex. If you look at the big picture, How many people pay in full vs. min balance/mb+? Also, I would think anyone lending money will feel negatively if you owe a balance, because yes you collect interest, but there is also a chance that it won't be paid back fully (i.e. bankruptcy) then they only collect a fraction of what they originally loaned.

Mathematically for example:
If 1 out of every 10 people pay in full, out of 100 people, they still collect interest from 90 people. You also have to consider the different APRs. Some people may just pay the prime, others may have higher APRs.

Another thing is that banks get more interest from the other types of loans they offer other than credit cards. Personal, auto, mortgage, etc. is where they really make revenue.

As for the swipe fee, my friend owns a small boutique and she uses one of those square wallet things that plugs into your phone. Amex charges 2.75%. I don't know if having an actual register card terminal vs. phone app makes any difference in fees tho...

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Postby MemberSince99 » Wed Apr 09, 2014 6:35 am

Everything I've read indicates they don't like long term, heavy balance carriers. I have no personal experience to back that up as I don't carry a balance with anyone but the last lender I would do it with would be Amex, though in practical terms it really wouldn't make any difference as I won't be getting a CLI from them regardless. But for those who can get CLIs from them, I would not do it long term.

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