web analytics

American Express The Plum Card – Payment Flexibility?


Small businesses that experience variance in their monthly cash flow may find that the American Express The Plum Card offered as one of AMEX’s OPEN Business Card account types is an indispensable addition to their financial management. It is not a perfect card for every business, but used properly it may offer financial rewards and flexibility to help small businesses stay profitable. It is important to remember that, like most AMEX offerings, The Plum Card is a charge card and not a credit card. That means, American Express The Plum Card is designed to be paid in full each billing cycle and unpaid charges tend to have a very high penalty percentage rate. While the American Express The Plum Card does have numerous perks often associated with business credit cards, and includes a cash rewards program for early payment, it is mostly distinguished by the card’s 60 day interest-free deferment program.

Businesses applying for the American Express The Plum Card should also have an excellent credit rating. Typically, a score above 720 will be required for this type of account.

American Express The Plum Card Unique Payment Flexibility

The most compelling aspect of the American Express The Plum Card is the ability to defer payment on up to 90% of monthly charges for up to 60 days. Payment flexibility is central to the design of the card’s program, beginning with the option for account holders to set the statement cycle to conclude at the beginning, middle or end of the month based on when their cash flow is best served for paying the balance on their accounts. Because many businesses do not have steady cash flow, some months may have less coming in than going out and paying all expenses in full might not be practical or even possible. Rather than utilizing a credit card that will charge interest on all charges not paid off each month, The Plum card allows for partial payments to be made on new charges, as little as either the minimum due or 10% (whichever is greater) of the outstanding amount prior to the due date, while deferring the remaining total for up to 60 days.

Certainly, as this is a charge card, the option to pay the American Express The Plum Card in full every month is always there and it is encouraged. Although account holders can take advantage of the interest-free 60 day period to pay off the balance without additional interest costs, The Plum Card comes with a reward for early payments. In fact, used this way, small businesses can enjoy the perks of their American Express membership while also getting cost-cutting credit applied to their statements. Because it is a charge card, the spending limit is also not set in the same way as a credit card. AMEX re-evaluates the spending limit based on a variety of considerations, including past spending and an evaluation of card holder resources, but primarily upon the growing trends of card use and payment history.

Discounts for Early Payment of the American Express The Plum Card

When American Express The Plum Card account holders make a qualified payment on their outstanding total due during the first ten days after the statement closing date, they are eligible for a 1.5% credit back on their next statement. Due to a glitch in the fine print, it requires a bit of proper financial management to time the payments properly in order to maximize the reward: payments cannot be made until after the statement closing date, and must be made during the ensuing ten days. Unfortunately, payments made between the end of ten days following the statement cycle and before the next statement is issued do not qualify for the early pay discount. For payments to properly qualify card holders for the discount, they must be at least the minimum due listed on the statement, and must be within the proper time frame. The discount is applied to purchases or services used by the business card holder for business purposes, after compensating for returns, refunds or credits. The discount is not applied toward balances deferred from previous months, nor does it apply to fees. The discount also does not apply when buying products that are essentially the same as cash, such as gift cards, pre-paid debit, travelers’ cheques or the like.

The 1.5% credit can add up with frequent use during the times when business is brisk and cash flow is readily available, helping to offset the high annual fee associated with the card.

Fees and Rates for the American Express The Plum Card

The American Express The Plum Card does come with a $250 annual fee. This is waived during the first year, which may make it more appealing, though the card benefits may bring enough value on their own to warrant the high annual cost. If the business is able to take advantage of the 1.5% reward for early payment on over $17,000 of eligible purchases each year, that covers the cost of the annual fee. See below for other reasons that the expense of membership may be worthwhile.

The waived annual fee does not apply to card holders who had a previous AMEX card account and transfer that to The Plum Card. The initial year introductory fee only applies to new applicants. However, there is no charge for additional cards for employees when they are on the same main account.

All charges are to be paid in full with the receipt of each monthly statement, or a portion may be deferred as long as payment requirements are met. As long as payments are timely, there will be no interest charges on purchases. Foreign transactions will have as 2.7% transaction fee based on the U.S. dollar amount after conversion. Late payments will be assessed a 1.5% fee initially, with a minimum penalty of $35, then a penalty of 2.99% on any amounts past due will accumulate. Returned payments will also cost $35.

Card Member Benefits of the American Express The Plum Card

This card carries the basic American Express Business card benefits. These include the following:

* Purchase Protection
* Domestic Auto Rental Insurance
* Baggage Insurance
* Global Assist Hotline for emergency assistance while traveling
* Roadside Assistance
* Travel Accident Insurance

These various benefits could add up to a savings over the cost of the annual fee, when they are actually needed.

One of the best built-in benefits, however, is the OPEN Savings program. With this program, an automatic credit is applied to each statement for purchases made through select partner companies. The list included such business to business partners as FedEx and Hertz and the discount is up to 10%. A full list of the participating vendors is available on the OPEN Savings website.

Additional OPEN Business Account Benefits

* Dispute Resolution
* Identity Theft Assistance
* ReceiptMatch for digitally storing copies of receipts and matching them to statements online
* Account Alerts
* Authorized Access
* Online Statements
* Mobile Apps
* OPEN Forum for enabling networking among other card members and being able to receive information from various experts in the form of articles and videos

Bottom Line

This is a card that is ideal for businesses that do not intend to carry a balance on their cards but may have cash flow issues to deal with occasionally which would warrant an additional month to pay off the balance. The early payment reward is generous compared to many other similar programs on the market, but it needs to be managed carefully to make the most of it. While the annual fee is steep, the possible savings associated with OPEN Savings, combined with the other benefits of membership, could easily more than pay for the annual fee while offering quite a bit of additional value if they are taken advantage of. The card is also very clearly geared toward domestic use within the United States and its territories, and does not have as much value for card holders who require frequent international travel.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: