Put your mortgage
payments on your Amex card!
David Gaffen and Teri Cullen think
it’s a really bad idea; I’m not so sure. Certainly it would seem to make a lot
of sense for a lot of people who pay off their card every month — assuming
that American Home Mortgage’s interest rates are competitive, those individuals
will get an enormous number of reward points in return for their $395 one-time
fee.
What’s more, it’s unclear from the press release whether this scheme applies
only to Amex charge cards, or whether you can use Amex credit cards as well.
With the charge cards, remember, you have to pay the balance off in full every
month. I’ve got a call in to Amex trying to clear this up; I’ll update this
post if and when they get back to me.
Update: Amex called back, and this promotion applies
to all American Express branded products, not only the charge cards. So if you
have an Amex card from Citibank, or an Amex Blue card, or a Starwood Preferred
Guest Amex card, or any other credit-card with the Amex logo on it, you can
use it to make your mortgage payments. And if you don’t pay off the balance
every month, you could get into a lot of trouble very quickly. On the other
hand, if you have the One
card, then Amex will essentially rebate 1% of your mortgage payments every month,
which could add up to a few thousand dollars, over time.
Of course, the risk (or perhaps the hope, from Amex’s point of view) is that
people will accept a higher interest rate on their mortgage if they can get
Amex points for paying it off. And that’s a decision which makes very little
financial sense.