Myth or Truth: Paying for Lunch on a CC Is Bad for You?

[CreditScholar]

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@OnTheRebound wrote:

Everytime this topic comes up my emotions run wild.

I have a simple question...

Why would Amex or any other lender issue a merchant account to a establishment that that they don't want you to shop at?

Hell, use it anywhere you want to. Just pay your bill on time and you won't have a problem. If they do take AA it's likely something else is going on besides the fact you bought a cheese berger at McD's.

We use our Amex everywhere it's accepted. Walmart, McD's, Dollar Store, State and Federal taxes, property taxes, attorney. I even used it to pay a speeding fine. Never got a phone call from Amex asking why I'm shopping at the Dollar store or why I used their card to pay taxes.

My hope is this myth dies. But, I know, inevitably, it will come up again.

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Of course it's going to evoke emotion because it runs contrary to some of the most closely-held principles of society such as equality. Most people wouldn't like to think that they're being profiled, judged or categorized, but that's exactly what's happening. This goes back to the earliest days of "all men are created equal", which frankly isn't true. Some people are simply better than others (in various ways), and as a reflection of society credit is no different. People will be offended, but it's true.

Amex uses this practice to determine your likelyhood of default, and to do this they examine your spending patterns. They are looking for signs that your financial position has changed, and if it has they will take action to mitigate their risk exposure.

R0C is spot-on in that it won't affect most people, but it does affect a few.

Person A is an average pleb who spends $5 at McDonalds for lunch regularly. For him, using it there won't cause any harm since it's seen as part of his normal spending pattern anyways.

Person B has been charging $100 for lunch everyday for the past several years and suddenly starts eating daily at McDonalds for the same $5. He will likely suffer AA or a FR while Person A is ignored. Why? Because Person B has deviated from his normal spending patterns but Person A hasn't.

For Person B the answer is yes "using his Amex at McDonalds did have a negative impact", but that's only half of the story. Person A wasn't affected at all so there's a danger in taking a statement, applying it literally and applying it to everyone.

It's a lot easier for people to deny that it exists because it offends their values. Also since it doesn't affect the vast majority of people, it's easy to think this. However for those who it does affect and those who are in-the-know, it is very much a reality.