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Registered: ‎12-16-2012
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Re: The death of reward credit cards?


bs6054 wrote:

FiscalCliffer wrote:

That further proves my point that American Express is running a tight ship on who to allow in (or out) of their cardholder network. 

I've never even heard of Discover doing financial reviews on it's cardholders so I don't lump them in with American Express


I think most of us would agree (although the ship is much broader than in the past, and more than public perception), and it is well documented that Amex default/write-off rate is lower than the big banks, and slightly lower than Discover.    But how does that impact the subthread, which is basically, "If you are a merchant, should you take the higher cost of accepting Amex?"

Merchants who sign exclusive agreements with Amex pay significantly less in fee then say a merchant who accepts all forms of CC. Its why Costco only accepts Amex in warehouses and at their gas pumps. They did not drop Discover just to give Amex more money then they were paying Discover for swipe fees.. Amex is also picky about who it signs exclusive agreements with(less so now then 10 years ago). It makes sense in the case of say Costco where the average amount spent per purchase easily exceeds $300.00 compared to say Walmart where it is much less. I am not saying everyone who shops at Costco is wealthy however I would say it is probably a safe bet the net annual avg income of Costco members ($95,800) is higher then say Sam's club or the typical weekly shopper at Walmart. 
I think most of the mystic of Amex is based on stuff that happened in the last few decades. Amex of the high rolling 80's-90's is not the same company it is today. Not saying it is not a premier or prime issuer it is but their card lineup and UW req for the expanded selection is no where near as strict as it use to be. Amex built its reputation and mystic as a charge card provider not to be confused with a credit provider. Wealthy people do not pay interest they do not carry balances they PIF be it $20.00 or 20k.  I think it was late 1980's before Amex even issued a revolving credit line(optima?). Their bread and butter had always been the charge card line which does not generate interest income. So Amex charged higher fee then Visa/MC and they were able to get away with it based in part due to their perception as catering to wealthy people who are more likely to spend a lot of money in a single transaction. Or as someone else pointed out there is a greater % of profit in that 5000.00 flat screen then the 32inch on sale for 299.99. I would guess your looking at 50% profit on the former verus maybe 8-10% on the latter subtract the swipe fee and your not left with much to satify your stockholders unless your a giant like Walmart who can make a ton of money on lower margins due to the sheer number of transactions. 
But the diffrence between Amex and Visa/MC is shrinking as Amex continues to tweak there card lineup and lending practices and increase there co-branding. Honestly it has to because thier Visa and MC cards out right now that have the exact same prestige and spending power of any Amex offering. 
With the fee overhaul act going into effect this year it will be interesting to see how many merchent's choose to remain exclusive with any card company.

 

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Registered: ‎11-25-2008
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Re: The death of reward credit cards?

Like I said, AMEX is doing the selecting, not the average card member. They are deliberately making places like Costco all exclusive to AMEX for the same reason. There are less costcos but the average costco is far bigger than the average walmart, and also further...it just so happens that everything you buy in these "bulk savings" gimmick stores is packed in boxes of 10 or 20, making the average item look like a deal since everything they sell is marketed in a way that can't be compared with other places and prices (Samsung makes a model 8000 but for costco, they will produce a model 7950, just for costco, so you cant compare the price anywhere on your phone). Then a person buy  a handful of items at $10 ea minimum to make the trip and membership worth their while..=Combine those membership fees with the distance of costco and the way things are packaged (in bulk), people will spend more on average since they will only be making the trip once a month and with a membership cost charged every year, you can bet that these "deal catchers" are going to make use of that membership card. 

Their tactics are the equivalent of a hospital denying a person surgery because they drove into the emergency room in a 1982 honda, and you dont look like you can pay the bill sooooo it's cut off time. Please call us and let us know when you're making more money, only then can we approve your request 

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Re: The death of reward credit cards?

FiscalCliffer, have you ever actually been a Costco member? They have a lot of fantastic values. My savings on tires easily doubles what I pay for membership... Yes the same exact model tire. Often Costco models are BETTER. For example Costco Blu-Ray players are the same unit, usually the same price, but include an HDMI cable for free. Not a huge deal if you know such cables are $4 online but a bargain to the person who'd buy the player with Best Buys $30 cable. Contact lenses are priced similar to the cheapest online distributors (much cheaper than any other optometrist including Walmart). Oddly movies are quite expensive... Amazon is almost always cheaper. But regardless Costco is a fantastic value. Odwallas are like $14 for ten. $1.40 each. They're like $2.50 at Walmart and more at other grocers. Etc.
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Re: The death of reward credit cards?


nyancat wrote:
FiscalCliffer, have you ever actually been a Costco member? They have a lot of fantastic values. My savings on tires easily doubles what I pay for membership... Yes the same exact model tire. Often Costco models are BETTER. For example Costco Blu-Ray players are the same unit, usually the same price, but include an HDMI cable for free. Not a huge deal if you know such cables are $4 online but a bargain to the person who'd buy the player with Best Buys $30 cable. Contact lenses are priced similar to the cheapest online distributors (much cheaper than any other optometrist including Walmart). Oddly movies are quite expensive... Amazon is almost always cheaper. But regardless Costco is a fantastic value. Odwallas are like $14 for ten. $1.40 each. They're like $2.50 at Walmart and more at other grocers. Etc.

Yes, but did they perform the emergency surgery you needed, or did they laugh at your car???  :smileytongue: 


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Re: The death of reward credit cards?

Hope all the participants in this thread pay in full each and every month.  If not, you don't have any rewards,  just a slightly reduced interest rate on debt.

 

 

 

 

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Re: The death of reward credit cards?

[ Edited ]

FiscalCliffer wrote:

Like I said, AMEX is doing the selecting, not the average card member. They are deliberately making places like Costco all exclusive to AMEX for the same reason. There are less costcos but the average costco is far bigger than the average walmart, and also further...it just so happens that everything you buy in these "bulk savings" gimmick stores is packed in boxes of 10 or 20, making the average item look like a deal since everything they sell is marketed in a way that can't be compared with other places and prices (Samsung makes a model 8000 but for costco, they will produce a model 7950, just for costco, so you cant compare the price anywhere on your phone). Then a person buy  a handful of items at $10 ea minimum to make the trip and membership worth their while..=Combine those membership fees with the distance of costco and the way things are packaged (in bulk), people will spend more on average since they will only be making the trip once a month and with a membership cost charged every year, you can bet that these "deal catchers" are going to make use of that membership card. 

Their tactics are the equivalent of a hospital denying a person surgery because they drove into the emergency room in a 1982 honda, and you dont look like you can pay the bill sooooo it's cut off time. Please call us and let us know when you're making more money, only then can we approve your request 


You make business strategy sound so dirty.  I'm not even sure I get the metaphor. 

 

I will say, chiming in several pages late, accepting AMEX might be a toss up to some merchants; but restaurants, especially those that may bring in a business/corporate clientel, shouldn't think twice.  There are simply too many corporate AMEX holders, or personal AMEX holders that use it for business, to ignore.  If I'm going to plan a meal for my team, or clients, or anything else business related, the merchant better take AMEX, because that's all I'm paying with.  It's not because I'm a snob, it's simply what my business uses.

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Re: The death of reward credit cards?


Uborrow-Upay wrote:

Hope all the participants in this thread pay in full each and every month.  If not, you don't have any rewards,  just a slightly reduced interest rate on debt.

 

 

 

 


Solid. 

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Re: The death of reward credit cards?


scenery_guy wrote:

Uborrow-Upay wrote:

Hope all the participants in this thread pay in full each and every month.  If not, you don't have any rewards,  just a slightly reduced interest rate on debt.

 

 

 

 


Solid. 


I would hope no one is using a rewards card to carry debt; The APR is specifically higher because of the rewards...

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Re: The death of reward credit cards?


Jutz wrote:

scenery_guy wrote:

Uborrow-Upay wrote:

Hope all the participants in this thread pay in full each and every month.  If not, you don't have any rewards,  just a slightly reduced interest rate on debt.

 

 

 

 


Solid. 


I would hope no one is using a rewards card to carry debt; The APR is specifically higher because of the rewards...


I'm sure this is the case.

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Posts: 23
Registered: ‎11-14-2012
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Re: The death of reward credit cards?


Jutz wrote:

scenery_guy wrote:

Uborrow-Upay wrote:

Hope all the participants in this thread pay in full each and every month.  If not, you don't have any rewards,  just a slightly reduced interest rate on debt.

 

 

 

 


Solid. 


I would hope no one is using a rewards card to carry debt; The APR is specifically higher because of the rewards...


Yes, in general.  But of course lots of people post here about carrying balances during the 0% APR of their reward cards, and some cards, such as PenFed at 9.9%, might be lower than the average non-reward card.

 

So if you have to carry a balance, using the right reward card might be the way to go.

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