Middle Class Jobs, Income Quickly Disappearing (with some depressingly eye-popping charts)

[mwooldri]

32. American Express* loves their "deadbeats".

* Note - this is my own opinion, I am not talking on behalf of my employer (American Express).

From my perspective as a customer service rep, Amex makes their money on the transactions that go through the network. I think that American Express's perfect customer is one who charges a lot on the card, and pays in full before the due date on the bill (among other things). After all, the original American Express cards do not charge interest because payment in full is required each time, and there is no set "credit limit".

I have spoke with some card members who have told me that they are a "deadbeat". I'm usually involved when these (wrongfully named) "deadbeats" call in because they did overlook a payment and was assessed fees - they're asking for a credit on fees they rarely ever get charged. I think that those who call themselves "deadbeats" are people who never pay a late fee or an interest charge and that the credit card company isn't getting any money out of them, hence "deadbeat". This is so wrong! American Express makes more money from transactions than fees and interest. A self-named "deadbeat" who uses their card often and pays in full each month before the due date makes good money for American Express.

IMO the true deadbeat is a person who makes charges on a card, and totally refuses to pay the bill (even though they can pay it in full if they wanted to). People who can't afford to pay are not deadbeats IMO either.

As an aside - again I'm speaking on my perspective and not that of my employer - I've seen the best credit scores on card members who a) have a good sized line of credit, b) who use the card sparingly e.g. gas charges only or dare I say only at Costco?, and c) pay their bill in full each and every month by the due date. I am guessing because the credit score is rated based on a number of factors that these behaviours are most favourable to generating a decent credit score. I don't know the formula the bureaus use, but the mix that I see works best is:

A) Never being late (at all),
B) The size of the credit lines (bigger generally better),
C) The type of the credit lines (mix of revolve and installment but not too much),
D) The amount used on those lines (for revolving a little is best, maxing out - dreadful, but zero is not good),
E) how many times credit has been applied for (best is very rarely - once every two years perhaps?), and
E) how old those credit lines are (older the better).

Out of these, A and D appear to me to have the biggest impact on the credit score. I found myself in a position a few years back to entirely pay off a couple of maxed out credit cards. The credit score jumped 40 points in a month, because I had credit that I could use.