One of the most common questions that is posed on the forum is in regard to American Express' policy of only allowing one payment through the online portal within the first 30 days of linking your bank account.
Since I had this same question when I was a new AMEX cardmember, I thought I would try and explain the reasoning behind the policy.
WHY ONLY ONE PAYMENT
New cardholders are frequently disturbed and perplexed to find that AMEX will not allow you to make multiple payments through the online portal within the first 30 days of creating your account AND linking a bank account to fund payments. Why would AMEX prevent me from making a payment? This doesn't seem to make sense! Don't they want my money? This is a stupid policy! What difference does it make?
First, Some Background
American Express has "historically" been a very conservative bank. Although it isn't entirely true today; once upon a time, it used to be more difficult to become a cardmember because they had more stringent underwriting to even be approved for their green charge card. Still today, their bank-issued credit cards (e.g BCE, BCP, ED, EDP) have slightly higher underwriting standards than the co-branded credit cards (which is why some can be approved for a Delta Gold card but be declined for the Blue Cash Everyday card). I wanted to point out what some might consider obvious for reasons what will be apparent later.
Second, Automated Clearing House (ACH) transactions
Have you ever noticed that when you make a payment on your AMEX card, the funds usually take a day or two to post to your checking account? That's because when you make your payment, AMEX initiates an ACH transfer of the funds from your banking account to AMEX. Since these funds must be audited and routed through the federal reserve system, these batch settlements cause the lag in time between the actual transaction and it's eventual settlement. This is important to remember.
Now back to our regularly scheduled programming
We all know that there are nefarious people who will open credit card accounts either through identity theft, or simply applying for a card using some other fraudulent method. We'll call this guy Black Bart. Bart also likes to open up fraudulent checking accounts at banks using these same means. Using a stolen or otherwise duplicitous AMEX card, Bart charges as much as he can with these cards and schedules payments to be made through their fraudulent checking accounts (yes there is actual money in the checking account). Bart knows that AMEX will initiate the ACH transfer and they will get a confirmation that there are funds cover the payment, but immediately after scheduling the payment, he withdrawals the money leaving the account empty. Bart has swindled both the merchant he purchased goods and services from, and left both the merchant and AMEX hanging.
CONNECTING THE DOTS
AMEX is unique from Visa and MasterCard in that they are BOTH the card issuer AND the acquiring bank. They benefit from making money from both the swipe fees and the discount fees charged to the merchant. They also have another huge advantage that neither Visa and MasterCard have, which is the ability to see how you spend AND pay your credit obligations. Over time, AMEX builds a really good profile of your spending and payment habits. Being the "conservative" bank that they are, they simply want to ensure that it is you making the purchases and payments and not Black Bart. In their determination, 30 days from linking a bank account for payment is enough to know whether your account is legitimate or not.
But I want to make multiple payments!
Often, those who are re-building their credit fear getting back into debt (a good fear to have) - they want to ensure that whatever they charge gets paid right away and they are not charged interest (another good idea). While is is simply fine to make one payment a month to AMEX, if you feel the need to make mid-cycle payments and you are still within the first 30 days of linking your bank account, you can call a CSR and request that they pull the funds from your linked bank account. They will be happy to do so. After the first 30 days from linking your bank account, you will be free to make mid-cycle payments whenever you have posted charges on the account.
A Final Caveat
If you do make a payment and for whatever reason that payment is returned unpaid, you will find your cards shut off (AMEX is always keeping a watchful eye out for Black Bart), so please make sure this never happens.
Relax! Enjoy your cardmembership. I'll see you in the Centurion Lounge!
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