Helping you Pay Attention, Not Interest
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A debt-free advocate’s look at the American Express Enhanced Business Gold Rewards Card, a review
I discovered quite a few bloggers are paid to review credit cards and promote them on their websites. They believe themselves to be offering a needed service by educating consumers on the thousands of credit cards launched each year.
Being an anti-debt guy, I have to speak publicly about the dangers of credit cards. In fact, I am purposefully writing this article as a credit card review of the Enhanced Business Gold Rewards Card by American Express Open in hopes of reaching those who have not heard the message of debt freedom and could become the next victims of the debt slaughter.
I launched another website and American Express immediately sent me a pre-approved offer for their Enhanced Business Gold Rewards Card. Why a business card? They didn’t review my business plan because there wasn’t one. They didn’t look to see that I teach people to cut up their credit cards. I haven’t had a credit card since 2007 and am registered on the National OptOut registry. There was no reason for Amex to offer me this card over anybody else – they were just fishing.
Since they are going to put their trash into my mailbox then it’s only fair that I trash their 10 reasons for why I should get their flavor of plastic.
Here are the 10 sales points in plain english with all the dangers exposed:
They say I’ll get business-sized spending power to help grow the business. They also have the audacity to suggest you “put every possible expense on the Card”. HOLY TOLEDO! Capital is hard to come by when starting a small business so someone taking Amex’s advice is about to get a harsh wake-up call from an affliction called “suffocating credit card debt”.
I’ll avoid the debt trap while maintaining complete control over the power of purchase by paying for the things I buy, not financing them through American Express’s OPEN card.
“Upon Card Membership, you’ll be automatically enrolled in the Membership Rewards program.” The idea is to lure me into purchasing things on their card, which charges the vendor for service and swipe fees, in order to earn rewards “that you can reinvest back into your business.”
Rewards programs sap millions of dollars out of our economy and into a PO Box in Utah. I would rather the vendor save the money from swipe charges by paying cash or at the very least support my local community by using a bank that is in my own County.
They listed the same reason, the rewards program, only this time they detailed how many points you can earn from certain debt purchases (more commonly known as credit card purchases). Triple rewards for this type of purchase, double for that. Oh, and there are some limitations to how many rewards in the fine print.
I’m not impressed for the same reasons mentioned above
Um, this is the same thing as Reason 2 and 3. Instead of listing this as one of the Rewards That Mean Business items they created a separate reason for making U.S. purchases from “select computer hardware, software, and cloud computing providers.”
I won’t comment on this because it’s a duplicate of the two prior reasons.
This is an offer to store a digital image of your receipts.
That is kinda cool, but I can promise you that there is an app for that and it doesn’t require me to go into debt with an American Express Enhanced Business Gold Rewards Card.
“The OPEN Savings benefit is a built-in feature of your American Express Enhanced Business Gold Rewards Card designed to get you even more Membership Rewards points. Automatically get up to an extra 4 Membership Rewards points for every eligible dollar spent with OPEN Savings partners.”
Again with the points, but this time it sounds as if I am supposed to saving money this way.
It should be noted that the OPEN Savings partners consists of only 8 companies: Hyatt hotels, Carey and Hertz rentals, FedEx, HP, OfficeMax, 1-800-Flowers, and Barnes & Noble.
I’m beginning to think this is a snow job; “Hey, look over here at the rewards. Ignore the small print, we have a Membership Rewards program!”
“Operate your business confidently with Purchase Protection.” Amex is boasting their damage insurance and extended warranty services.
I can get many of the same protections and benefits from companies I already deal with like my car insurance company and the actual manufacturer of the thing I would want an extended warranty service for. No need to duplicate benefits, especially for a credit card.
“Whenever you travel more than 100 miles from home, you have security and added peace of mind 24/7 with medical, legal, financial, or other emergency assistance including lost luggage blah blah blah.”
When my luggage is lost I will be talking with the airline that has misplaced it, not an Amex rep that has little authority over a gate agent. That same school of thought can be applied to the other benefits mentioned in their flyer.
Call anytime.
So does everyone else, don’t they? If a local bank doesn’t offer a 24 hour answering service then it likely can be handled during normal business hours.
“Introductory annual fee for additional cards in the first year is $0, then $50 for the first additional card and no fee for other additional cards.”
In other words, the benefit is they will give you a free card for an employee and only charge you for the 2nd. This might be the only benefit that stands out from other cards, but only for business owners with employees.
The Enhanced Business Gold Rewards Card from American Express OPEN is trying to sell me on reward points.
For spending more than $6,000 via their piece of plastic you can get:
Weigh the benefits with the $175 annual fee after the first year and the so-called “benefits” start to get washed away. Add a 70% risk of interest charges when there isn’t enough money to pay the balance in full and we quickly find ourselves in the debt slaughter.
Credit cards are dangerous to those who lose control and it happens to good people every day. Why play their games when cash and debit cards will do everything we need without the risk of debt?
Spread the Debt-Freedom message with a vote Put the MoneyPlan SOS podcast on the Stitcher map
If you listen to Stitcher then you already know how fun it is to discover new podcasts. Would you like to help others discover the best podcast that teaches how to pay attention, not interest?
Stitcher announced that the 2013 Stitcher Podcast Award nominations are now open. Everyone is invited to vote for their favorite shows in 19 categories every day through December 24th.
The top 6 nominees in each category will advance to the finals – and get a bunch of publicity. That is where I need your help. It would be improper for me to bribe you for your nomination, but I will ask you to nominate the show for the sole purpose of getting it in front of many more people.
We need more shows that talk about debt freedom. Will you help get the MoneyPlan SOS podcast in the Top 6 of the Best Business & Finance Shows please?
Thank you!
Podcast: Play in new window | Download
Welcome to the Money Plan SOS podcast, where everyday Americans learn how to PAY ATTENTION, NOT INTEREST!
My name is Steve Stewart. I’m a Dave Ramsey Trained Counselor and I HATE YOUR DEBT MORE THAN YOU.
I believe everyone should be rich so they can help others in times of need. Life is too short to be this broke! Let’s work together on designing a plan for your house of financial freedom.
I’m here to help answer your call for help (S.O.S.) with a MoneyPlan.
When you hear what I have to say about being distracted by credit scores you might envision a guy standing at a busy street corner shouting that the world is coming to an end.
Many people misunderstand my position on building credit. Their impression is that I’m preaching about conspiracy theories.
However, once you understand the facts and have all the information you will think differently about this important financial topic and join me in drinking the Kool-aid.
Fair Isaac Corporation (FICO) is a publicly traded company on the NYSE that “provides analytics and decision making services intended to help financial service companies make complex, high-volume decisions”.
More specifically, one of the services FICO provides is consumer Credit Scoring. This simplifies the loan approval process for lenders and summarizes the information they want into a 3-digit number.
In short: FICO created credit scores.
When was the last time you used your credit score? Think hard. You can’t remember can you because it has never happened. You have never used your credit score – only companies and lenders do.
What is really crazy is that people are super-secretive about their Social Security number and take steps to keep their home phone number from being listed but they WANT FICO to sell our personal banking information (allowing them to make a profit) to lenders who then turn around and try to sell us money (debt). That’s CRAZY to me!
You’ve heard the phrase: “Hate the sin, love the sinner”. I hate credit scores but love the consumer. If your idea of building wealth and being smart with your money is playing the “build your FICO score” game then I have bad news for you. You are being duped!
I hate what the credit scoring system is doing to the consumer. It is promoting the idea that borrowing money is the way to wealth and happiness. Debt is a more accurate name for borrowing money, and it leads to stress, feelings of inadequacy, and broken relationships because the money is tight. That doesn’t sound like happiness to me.
For this reason I can not promote the credit scoring system. Once I learned what credit cards and loans were doing to my neighborhood I found that debt is actually against my religion.
What should be completely obvious here is that each one of these items is based on debt and debt products. How much money you make or how much money you have saved has no effect on your credit score.
Also, the normal monthly bills that are not debts (electric bill, cell phone payment, rent) are not factored into your traditional credit score. It sounds to me like Fair Isaac really isn’t fair when it comes to evaluating our credit worthiness after all.
When you are contemplating ways to improve your credit score you are being distracted from building wealth. Instead of gaining riches you will end up paying interest on debt by playing the credit scoring game.
The interest you pay is a penalty for your future. No only is debt dipping its hand into your future paychecks but a good portion of your debt payments go towards interest. What does interest buy you? Answer: Instant gratification for a low monthly rate.
It is a rouse, it’s a distraction, it is the way “the system” gets us to spend our attention on them instead of our family and our own financial wellness.
The traditional advice is that you need to have a credit card and a mix of other debt products in order to “build your credit score”. I’ve also heard that you should utilize 30% of your available credit in order to have the best credit score. Okay Mr. Wizard, let’s do the math:
I don’t know about you but I would have a hard time paying off $4,995 a month to avoid interest charges. Follow this advice blindly and you will find yourself in the credit card debt cycle fast!
By the way – don’t be fooled by those telling you that improving your credit score will help you pay off your debt. I know of a guy selling his credit-building process and promises to teach you “how to raise your credit score, so you can pay off your debt”. How does a better score pay off debt? Does FICO cut you a check? Do you get a coupon or rebate voucher? This is simply just a lie to sell you his $1,000 program.
There is something the “experts” aren’t telling you: There are other ways to prove your credit worthiness that don’t involve being in debt! Good old fashion manual underwriting is one way you can prove your credit worthiness in order to get a mortgage at a good interest rate. It takes a lot more work for a lender to go through this process, so most of them don’t bother trying.
The good news is that there is a service called eCredable.com that helps banks get through this process more efficiently – and it would only cost you around $100. What eCredable does is verify the payments you have made to your electric company, your cable company, even your landlord to prove your eligible for a home mortgage at the best rates. That’s great news for a guy like me who has no consumer debt but might want to refinance my home mortgage while rates are low.
You see? One doesn’t need to borrow a bunch of money and pay a bunch of interest to prove their credit worthiness. One simply needs to pay for the things they buy.
Your current and future finances will greatly improve if you worry about paying off your debt and staying out of debt forever as we have. If a time comes when you need to qualify for a mortgage then you would likely have a better down-payment, resulting in lower monthly payments and a better chance of qualifying. If the bank is being stubborn about your nonexistent FICO score then have no fear: You have an alternative like eCredable to help.
It is my hope that your mindset about credit scores has changed. Join me in my mission of killing off soul-sucking debt and helping everyday Americans to pay attention, not interest.
We will all be better off by being focused on building wealth, not from being distracted by credit scores.
[stextbox id=”clickarrow”]Stop working for a FICO score and just prove your credit worthiness. It’s easy, simple, and membership is free when you use promo code “SOS“[/stextbox]
I’ve always been weary of points and miles programs. While you won’t hear me promote using credit cards for points because credit cards are harming your neighborhood I don’t discourage others from using individual company programs like hotels and even gas stations for the occasional perk. After all, I use some of them myself.
I should, however, caution you on collecting points and falling into their trap! This is the story of how booking a free American Airlines flight cost me $883!
Reward clubs are branded as “Loyalty Programs” and were designed to get you to come back. Panara Bread has their MyPanera program, Kroger promises $.10 off per gallon when you spend $100 on groceries, and Speedway give you 10 points per gallon of gas and bonus points when you buy items inside their stations. Given the choice of places to fill my tank I would choose the one that gives me a perk – and I often do!
However, the repeat business could lead us into making purchases we would never make otherwise. While the gas is flowing into my tank I would often go inside to see what the latest deal was on drinks or candy – two things I should probably be staying away from. Loyalty Programs know this type of benefit works in their favor, that’s why they make it so fun to buy their product instead of the competitions.
Over the past year I have accumulated over 18,000 Advantage Miles from American Airlines. My wife needed to comfort her newly-widowed mother so I went online to buy her a ticket. I only needed 7,000 more miles for a free $441.80 round trip so I weighed the costs of purchasing the miles. It cost me $192.50 for the miles, a $14.44 Federal Excise Tax, and a $35.00 Processing fee – brining the total to $241.94.
In other words I would spend $241.94 for a free $441.80 ticket. Sure, done deal!
Unfortunately, that was Mistake #1.
I didn’t realize that the points would not be posted to my account for up to 5 business days. My wife will be flying out Friday after work, a very busy travel time, so I couldn’t take the chance of waiting to book the flight. I decided to skip the path to rewards and opt-in to buying a ticket outright.
Already logged in to AA.com with the flight numbers staring me, I clicked on purchase and booked the flight. The tickets were issued two hours later.
That was Mistake #2.
Once the E-ticket confirmation hit my email box I realized my error: I failed to change the information to my wife’s name. No biggie, I’ll just call them the next day and have them change it. No harm no foul – except they didn’t think so.
I called the 800 number and spoke to a very friendly customer service agent. I told her my story and was told that she needed to contact the Help Desk. Funny, I thought I was calling the Help Desk. She returned within a minute to inform me that she could change the name on my electronic ticket for $200.00.
Wait a minute. She must not have understood me. This was a simple mistake. It couldn’t possibly cost two Benjamins to change a first name on an electronic ticket. She persisted. I continued. She stated her company’s policy. I had to apologize to her because I was beginning to sound rude. This was going nowhere. I needed her Supervisor!
I spoke to a stern but friendly-sounding supervisor named Karen. She explained they could cancel the ticket, credit my account for the $441.80 less the $200.00 change fee. I questioned why couldn’t a transfer fee cost $35, or why wasn’t it $2,000? Was it made to be prohibitively expensive so people wouldn’t change their flights as often?
She stated that it was American Airline’s policy to charge $200 and included some kind of Federal agreement, that “all ticketed flights have to be approved by the Federal Government”.
WHAT? That sounds like some kind of “I’m sorry Sir, the Government has our hands tied” excuse! I call bologna! If this was true then how does Southwest Airlines avoid charging me a change fee? (Put that in my “I wish I would have said” list).
That’s it. She wins. No matter what I say, no matter how much I cry, I’m going to have to fold. I hate confrontation and I’ll pick my battles elsewhere.
When it’s all said and done what could have been a free ticket (other than the purchase of 7,000 miles) cost me $883.74. This was nowhere near the result I was anticipating.
I’ll pay the unbelievably exorbitant exchange fee to get my wife to visit her newly-widowed mother. That’s all that matters here.
The Silver Lining
There is a lot of negative energy oozing from the words in this post. My wife has a saying that always brightens her day: “Whether the glass is half empty or half full, there is always room for more wine”. So, looking at the bright side of this expensive learning experience:
Dear American Airlines, I understand when planes breaks down and weather delays the flight crew for my plane out of St. Louis. I’ve always defended you when others complained about your customer service. I am often bewildered how you can get so many people to their destinations without more mishaps. Great job.
However, this $200 is crazy. I understand you are in the business to make money but where is the legitimacy of charging what is equal to the price of another flight? Does it really cost you that much to have a person working on a computer with a headset to change the name on my E-ticket?
I made a simple mistake. Charge me a fair rate and please don’t do this to anyone else. It’s just not good business in this day of Social Media and electronic ticketing.
