My Amex AU wants to make a large purchase using my account

[mikka1]

Hi everyone,

Quick question - my good friend wants to make a large purchase (a gift to his most important one) with Amex BCE card which is actually an AU card to my account.

Upfront disclaimer - I FULLY trust him, I work with him for a long time, I know he can technically afford such a purchase and I would have no problems lending him that money in cash if he needed that and if I readily had that amount now.

It shall be at around 40% of my credit limit on that particular card and given the timing it will most likely report as a balance.

On a plus side - I will get 1% back as a cashback which, given the overall amount, is pretty good.

On a negative side - I will have another card reporting quite a huge balance next cycle.

Other possible negatives? Any other considerations that I should keep in mind? Will Amex be upset if a new AU suddenly makes a very large single purchase (we are talking about $5k+ to make it more specific)? Any possible tax complications for me / for him (of course, if you are aware of those)?

Would appreciate any advice. I am absolutely inclined to say "YES", unless there's something specifically important why I should say "NO".

Thanks a lot in advance!

[espnjunkie]

I would be very careful about allowing such a large purchase on your account. At the end of the day if your friend does not pay, you are liable for the charge. 

Your friend should get his/her own account(s) to make such large purchases in my opinion 

[ryanbush]

Are you planning on applying for anything in the next 60 days? If not I wouldn't worry about it, I tend to charge large amounts for work and it has never caused me any complications as long as I pay it off before the payment is due.  If anything it will show AMEX that you can charge large amounts and pay it off, should help.

Although this is assuming you have complete trust in this person, as you stated above. 

[BootStraps]

Maybe a written promissory note between the two of you for the amount that he wants to charge?

If he is trustworthy, it shouldn't be a problem.

Just a thought.

[Open123]

The risk is very minor.

I think 40% utility is fine, unless you were planning to apply for some kind of longer term loan in the next 6 months.  Otherwise, I wouldn't fret over anything below 50%.  As to AmEx, a purcahse from a well known "brick and mortar" store should be fine, even if the large charge is from an AU.  If the charge is on anything resembling MS (such as paypal, etc...), there's a slight risk for an FR.  I'm assuming, he's been your AU for a while, and has used the card with some regularity in the past.

[mikka1]

Thanks, I was mostly thinking about possible tax / other legal implications of such a purchase, or if it immediately triggers FR etc.

[mikka1]

No, it's clearly not a MS, it's a brick & mortar upscale jewelry & other expensive items store.

Another problem is exactly that he was NOT an AU for a long time and does not have a long history on this card. Can this be an issue? (as it might look as I deliberately added this person to my account for that one specific purchase... which in fact is not)

[Open123]

---

@mikka1 wrote:

Thanks, I was mostly thinking about possible tax / other legal implications of such a purchase, or if it immediately triggers FR etc.

---

There would only be two possible tax implications.  You made this purchase for him as a gift, and only if it exceeds $14K; and, you loaned him the funds, and he defaults, whereupon you write off the loss issuing your friend a 1099.  Of course, if you charged interest for the loan, it is taxable as ordinary income.

Unless your friend is buying something to harm or defraud another, I can't see any legal implications.  

Depending on where the purchase is made and the history of your AU, it trigger an FR.  Unlikely, but it's hard to say without being privy to all of the factors.

[Open123]

---

@mikka1 wrote:

No, it's clearly not a MS, it's a brick & mortar upscale jewelry & other expensive items store.

Another problem is exactly that he was NOT an AU for a long time and does not have a long history on this card. Can this be an issue? (as it might look as I deliberately added this person to my account for that one specific purchase... which in fact is not)

---

It can be, if he's been very recently added.  No way to be certain, but others have been FR'ed for something similar to this.

[Creditaddict]

The single purchase should be fine.... my partners FR came after I spent nearly 5x the current CL in under 30 days and spend 1/3 of his reported annual income in under month and a half in addition to his past charging had always been under $1500 a month.

it's not single purchases they are usually concerned about they are concerned about spending that is completely out of norm and that exceeds your reported annual income but yet you continue to pay in full!