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Biggest Ever Card Purchase + Maths

Biggest Ever Card Purchase + Maths

Old Jan 16, 2001, 6:00 am
  #1  
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Biggest Ever Card Purchase + Maths

Biggest Ever Purchase on a Credit/Charge Card?

I understand that it is $2.5m for a painting on an AMEX card.

Which brings me toa an interesting question, the above trasaction woulfd hav earnt the cardholder 2.5m Membership rewards points. Enough for 25 Upper Class Roundtrip Flights to anywhere in the US from London. Now these would have an approx value of $150,000 (25*6000). Now does this mean AMEX is at a loss because if they made they std 3% handling charge on the purchase, they would have got $75k from the merchant?

Or has my maths gone wrong somewhere in the process?

Thanks,
Richard


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Old Jan 16, 2001, 6:44 am
  #2  
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Your error is assuming that AMEX's standard charge is 3 percent. The charge varies from one merchant and industry to another, but can be as high as 5.5 percent (and maybe even higher). AMEX's charges are much higher -- often double -- VISA's, which is why some merchants refuse to accept AMEX.

Bruce
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Old Jan 16, 2001, 8:18 am
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The problem is really in the valuation of the award tickets. Amex doesn't pay for the tickets, it pays for the miles, perhaps at only about 1 cent per mile, which would leave it a tidy profit.
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Old Jan 16, 2001, 8:31 am
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I take Amex as a merchant and have done for 20 years. They USED to be about double VISA, but now are about the same - about 2% for me, and often small business gets here for 1.8%. Yes, that seems lower than many USA merchants are slugged.

Lots of car dealers here take it for a $100,000 new BMW or Merc. They eat the fee as Amex does special deals on big numbers - always has for me anyway.

The painting deal mentioned above is no surprise if you have even seen what Sotheby's/Spink/Christies charge you at an Art auction!!! Think 15-20% "Buyer Fee/Commission". And the seller gets slugged darn near as much most times, plus Insurance, storage etc. For a few % they can live with a credit card, do the math.

Not to mention the worldwide publicity they got for it .. we still are talking about it!

------------------
~ Glen ~
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Old Jan 16, 2001, 10:58 am
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Another thought...Amex give 1.5 points per mile on Gold, Iam not sure on Plat, this guy may have even had the black card..
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Old Jan 16, 2001, 10:58 am
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Another thought...Amex give 1.5 points per mile on Gold, Iam not sure on Plat, this guy may have even had the black card..

I hope it was a nice painting....I could do him one for a lot less.
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Old Jan 16, 2001, 11:24 am
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Ferrari,

Re you sure about the points earning ratio. In the UK it is 1 point per pound regardless of card, I have UK Platinum and it still 1 point. The increased fee don't mean more points!!

Thanks,
Rich
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Old Jan 16, 2001, 3:21 pm
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I tried to charge a BMW about two years ago. (I checked with AmEx first to make sure it would go through - could be embarrassing otherwise!) The dealer declined, nicely. I said, equally nicely, something about their agreement with AmEx to take the card as payment for ANY transaction. They offered my LoJack (already ordered) at no charge.

Worked for me. The LoJack would have cost me a bit more than the miles would have been worth, but cost them much less than they would have had to pay AmEx. (It was a small BMW.)

BTW, I don't think all Gold cards get 1.5 miles per $. Platinum cards don't. I think it's just a special version of the Gold card with a higher-than-normal annual fee. It may be worth it if you charge a lot on an AmEx card.
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Old Jan 16, 2001, 3:34 pm
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What's a LoJack?
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Old Jan 16, 2001, 3:36 pm
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Actually, the aforementioned gold cards only earn 1.5 miles for transactions with certain merchants. I don't know of any AmEx that earns more than 1 mile/dollar for general purchases.
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Old Jan 16, 2001, 4:03 pm
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LoJack is an electronic system for tracking stolen vehicles. We have the equipment in several of our police cars to utilize if a stolen car comes through with the transmitter activated.
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Old Jan 16, 2001, 4:03 pm
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Efrem - Do you know if the agreement to accept the card for ANY purchase is correct with other cards as well? A couple of years ago I tried to use my AA-visa to purchase a car and was politely refused. They finally agreed to put about 1/3 of the price of the car on the visa, but not the whole thing. There was plenty of credit limit left, that was not the issue, they just did not want to pay the CC fee.

------------------
Fundi
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Old Jan 16, 2001, 4:12 pm
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They also want the sale to be final. If you charge the whole purchase, you MIGHT be able to return the car under the Fair Credit Billing Act. That is a legitimate concern.

Bruce
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Old Jan 16, 2001, 6:27 pm
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Efrem, very interesting. The same thing happened to me about 4 years ago (BMW dealer, had the Amex card in the window...). I called Amex, and they said that it is the dealer's discretion as to what they will accept the card for, despite the apparent commitment they make by posting the card-accepted sign on their premises. Finally, they (BMW dealer) said that since they accept the card for repairs up to (I forget the exact amount) about $4,000 for repairs, they would let me charge that amount, which I, like FFFundi, did.
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Old Jan 16, 2001, 6:28 pm
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About the 1.5 points per $ spent... I don't know if it's available in the US or the rest of the world, but in Canada Gold Amex holders can pay CAD$50 for the Amex "Points Accelerator," and received 1.5 points per Canadian dollar spent. Canadian Platinum cardholders get this benefit for no extra charge. When converted to US dollars, it works out to more the 2.25 points per US dollar spent.

Based on today's exchange rate, that purchase would translate into CAD$3,843,207, and 5,764,810 Amex MR points. While airline ticket options in Canada using MR points have been significantly curtailed with the demise of Canadian Airlines, last year that would have gotten you at least 46 first class trips on BA from, for example, Vancouver to Cairo.
Having recently done that trip on a CP/BA award and priced it out on Travelocity at more that CAD$18,000, conceivably those MR points could've gotten you CAD$828,000 worth of flights. That works out to about USD$550,000, or 22% of the original transaction.

All this doesn't include other discounts and promotions that Amex and Canadian Airlines had, nor the 10% bonus that Platinum card holders received for the last half of last year. Geez, I miss CP...
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