Problem using AMEX for US Savings Bonds
 

I just tried using a Starwood AMEX to buy US Savings bonds. These can only be done with a maximum of $1000 face value, so if you want to do more, you need multiple transactions.

After 3 transactions went through, the 4th was rejected. A call to AMEX indicated that they electronically flagged it as "unusual transactions on-line". They were able to adjust it so that further transactions went through - but suggested that in the future a call beforehand would avoid the problem.

By the way, if you do it now (before end of day eastern time on the 27th) the bonds will be dated Feb 1.

Related messages, for those who do not know about buying bonds with mileage-yielding credit cards, can be found at

http://www.flyertalk.com/forum/Forum1/HTML/005395.html (5 pages of messages)

and

http://www.flyertalk.com/forum/Forum1/HTML/005410.html (1 page)

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Middle_Seat
Texas Independence Day FT Get-Together March 2, 2002 -- See FT Community

I just bought 10 bonds on my starwoods AMEX card and had no trouble. Is it related to your credit line?

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DtG

It shouldn't be - I had plenty to complete all transactions - they said their software caught multiple on-line transactions and flagged it. Perhaps the software didn't flag yours due to differences in our buying habits. Who knows?

Always buy your bonds on the last day of the month as they earn interest from the 1st of the month. The converse is true when redeeming them -- redeem then on the fist day of the month.

I have bought as many as ten $1000 bonds in quick succession without AMEX stopping me. Maybe I just use my card so much that these purchases did not stand out!

Bruce

1. Does anyone know what the current interest rate on the I bond is?

2. What kind of penalty are there if I don't hold them for even 6 months? Do I lose any of the principals or just the interest?

(I took a quick look at the two related threads but couldn't find a quick answer)

Thanks!!

http://www.savingsbonds.gov/sav/sbirate2.htm

Look around here. You MUST hold the bonds for at least 6 months.

This is good advice except - on the Savings Bond website it said that Feb 27 is the last day for purchase for a date of Feb 1.

The best thing is to buy toward end of month, but AFTER closing date on your credit card (assuming you aren't getting the 0% interest on Hhonors Visa). Depending on your card, you could then pay it off about 1.5 months later, or about 2.5 months after issue date (1st of the month) - this nearly wipes out the 3 month early redemption penalty if you cash out in less than 5 years.

Current interest rate on I Bonds is 4.4%

Thanx for the info! Who'd a thought that the last day of Feb is the 27th!

I plan to use them and cash them in after 6 mos, and use the interest I receive towards my tuition payments -- that way, everything is tax free!

FYI


http://www.savingsbonds.gov/servlet/SBCPrice

This might be the problem. My card was denied at a store for a $3.74 purchase. I knew I had more than $1000 left from last months purchase and this month's purchase. When I called they said that that there was an additional $4000 hold from the us govt - even though the actual charges had posted. This makes no sense as there is no reason to have a hold - unlike a hotel which might not know what you might be charging and "holds" an amount. This happens when you "pay at the pump" - your card is authorized before you make your purchase and the hold $30-50 in case you are a motor home, so if you only buy $10 worth of gas, your available credit is down til it clears. So if your bond purchase is denied, it might be that the previous purchases have a hold which doubles the amount using up your credit line. So it might look like there is no problem with your available credit, but there might be. I was told what was being held when I called from the store.

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DtG

With my Delta AMEX the last two statement periods after buying 5 or 6K savings bonds each time one or two days later my availible credit was reduced to zero.The first time two different CSR said I was over limit because payment I made a week earlier doesn't credit until the END of the statement period & I would be charged 29.00 for being over the limit! LOL Second time it happened the CSR could do simple math and realized I should have well over 1k availible wrote some comments with my account & availible credit was reinstated.Bottom line if you have a AMEX card you need to always carry another card!

Don't leave home without another card. ;-)

Actually, if your credit limit is, say $5k, you can only buy $5k of stuff at a time. Once the purchases post, assuming that you have prepaid your account to cover all your purchases, you will be able to buy another $5k. So it can take many days to buy lots of bonds, even if you send in the whole payment ahead of time. I don't know why the credit card issuers do this, but they do. The only real relief is to get a higher credit limit.

Unlike my Citibank MC and Visa where I can prepay and restore available credit. AMEX does not let you do this. The problem seems to be - if you buy 5K in bonds, that the 5K is charged - but there is an additional HOLD of 5K (maybe a little less) which uses up 10K of available credit. If you still owe a balance from the month before, that also does not let you access your limit. So, if you have a 20K credit line, and balance from the month before of 10K, you buy 5K worth of bonds you might show no available credit even though in reality you have 5K left. If you pay the previous 10K it will restore 10K of your credit limit. Why there is an additional hold from the US GOV I do not know. I have e-mailed them about it but haven't really gotten an answer. Maybe eveyone could write complaining about the hold being put on the account.

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DtG