Advice From Amex

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Last week, I told you how I was going to take a look at the advice that credit card companies offer their customers. I don’t seriously expect them to add too much to the discussion, as I know their interests do not exactly align with those of their cardholders, but I thought it might be a little fun to take a look.   Over the next three days, I will examine American Express, Mastercard, and Visa’s web sites.

American Express

Let’s start the series by taking a look at the web site for my good friends over at American Express.   Amex has a Consumer Resources page on their web site with sections on Credit Resources, Credit Basics, Credit Reform, and Protection.     Under Credit Resources, you will find some basic information about credit scores and credit reports.   Most of it is accurate, bu they fail to mention the weights of the various components of your FICO score.    These components are not officially disclosed, but they are widely known.   Since Amex is really just a large customer of FICO, it is likely that they are under some kind of non-disclosure agreement when it comes to this formula.   Just so you know, the first 35% of the FICO score calculation is your payment history, The next 30% of the FICO score calculation is your credit utilization (how much you owe divided by your credit limits), The next 15% of the FICO score calculation is your credit history.  The next 10% of the FICO score calculation is your applications for credit. The last 10% of the FICO score calculation is your credit mix.

Another failing is in their links.  They provide many links to FICO itself, as well as some to the various credit reporting agencies and even some government institutions.   What they fail to do is to provide a link to AnnualCreditReport.com, the only completely free way to receive the credit report you are entitled to by law.

Card Basics

Under their “Card Basics” section, they provide some really general advice on not spending too much.   I didn’t really expect them to tell you that the best practice is to always pay your balance in full, and I wasn’t surprised when I couldn’t find this universally accepted wisdom.   What did surprise me was that some of their basic “Account Tips” were actually inaccurate.   For example, they advise customers that: “calling American Express to alert us when you’ll be traveling abroad lets us know to expect charges on your account that are out of your normal pattern.”

That is normally great advice, but if you do call American Express to tell them you will be traveling abroad, they will tell you that you should not have bothered, as their system no longer requires such notification.    When I traveled to Brazil earlier this month, that was the response I received.    I could not tell you if I had any difficulty using my Amex there, as I never even tried.    You see, another interesting tip that they leave out is that you should avoid using your Amex outside of the United States, as they will automatically add a 2.7% foreign transaction fee to every single charge.   Kind of surprising that they would fail to mention this, especially considering the huge, pending legal settlement that they are part of on this issue.

Credit Reform

There is a little information the CARD Act provisions here, but it is very vague.   I find it interesting that they say

“Beginning in February 2010, the due date for your American Express Credit Card will not vary from month to month. Your bill will always be due on the same date each month.”

My understanding was that the CARD Act forbid companies from placing due dates on weekends and holidays, yet I have noticed that Amex continues to do so.   It appears that, like the Discover Card, they feel that they are complying with the letter of the law since they somehow accept payment seven days a week.   I wonder how they accept payments on Sundays and holidays when no mail service will deliver.   How does that work?    Do I have to visit their headquarters in New York city, or can I just use a carrier pigeon?

Then there is gem, “We welcome these reforms because it makes our industry as a whole fairer to consumers. And we are happy to adopt changes that make it easier for our Cardmembers to manage their credit.” If that is true, than I am sure that they do not belong to any group that opposed the bill, or hired any lobbyists themselves, did they?

Protection

This sounds ominous, but it is just an explanation of some of their benefits.  Move along, nothing to see here.

Conclusions

Their Consumer Resources website is a little on the vague side, missing some key points that even they should have been included, like AnnualCreditReport.com.   Their explanation of the CARD Act protections is razor thin, like some of their compliance practices.   Throw in a little misinformation and I give it a C-. It could have been filled with even more propoganda, but they just didn’t bother to dig that deep.

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