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American Express is going to begin allowing pre-approved consumers who have a mortgage with 'partner' mortgage companies to charge their mortgages.... http://money.cnn.com/2007/05/23/pf/amex_mortgage_charge/index.htm?postversion=2007052314

Until now, mortgage lenders typically wouldn't take credit cards. And "card issuers would not encourage [the charging of mortgage payments] since this is in most cases a major red flag that the customer is in financial trouble," said Robert McKinley, president and chief executive of CardWeb.com.

But American Express is limiting its venture to cardholders it pre-authorizes before enrolling them, and then checks on them every month thereafter before a mortgage payment is charged.

Those cardholders will also have to qualify for a new-home-purchase prime loan or refinance prime loan - which typically goes to those with good credit - as opposed to subprime loans which are targeted to home buyers with bad credit.


Talk about a slippery slope.....for some people, this would be great - personally, I would love to get cash back on my mortgage payments. And in fact, I lived at an apartment complex one year that allowed me to charge my rent payment, so I got lots of airline miles (before cash-back cards). It was also nice to be able to make the charge over the phone rather than dropping my check in a box.

But for people who already have debt issues, this could be disasterous. People who are already overspending could feel that they have even more 'money' to spend because they can still make the minimum payments - at least until their interest rate on their card spikes because they are over-utilizing it.

And just weeding out people by their credit scores isn't going to capture all of the potential disasters. Think of the people who come to this board with tons of debt, much of it at low BT rates. To get the low BT rates, their scores are probably in the prime range, at least for the moment.

It will be interesting to see if this is picked up by other issuers and other mortgage companies.

AJ
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Interesting concept: only making the "minimum payment" on your mortgage.
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I don't post much, but I have to give this idea a thumbs-up.

I charge absolutely everything possible to my AX Blue Cash card each month. The result is that between work purchases (lots of money) and the ~$800/mo from my own personal spending/bills I hit their upper level cash reward tier within a couple-few months of the start of the year--1.5% on everything and 5% on gas/groceries.

I can't remember the last time I paid finance charges because I pay the bill every two weeks via my bank's website, amex is happy because they get their gobs of transaction fees, I'm happy because I get a little discount on everything I buy/do, protection from fraud, and convenience.

The key for me so far in not letting this be a slippery slope is that I don't consider my credit limit when I make purchases, I consider my checking/savings balances and I make financial plans before anything major or unexpected. I'm far worse when I have any cash in my pocket over $20 then my CC :-)
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Talk about a slippery slope.....for some people, this would be great - personally, I would love to get cash back on my mortgage payments. And in fact, I lived at an apartment complex one year that allowed me to charge my rent payment, so I got lots of airline miles (before cash-back cards). It was also nice to be able to make the charge over the phone rather than dropping my check in a box.

But for people who already have debt issues, this could be disasterous. People who are already overspending could feel that they have even more 'money' to spend because they can still make the minimum payments - at least until their interest rate on their card spikes because they are over-utilizing it.

And just weeding out people by their credit scores isn't going to capture all of the potential disasters. Think of the people who come to this board with tons of debt, much of it at low BT rates. To get the low BT rates, their scores are probably in the prime range, at least for the moment.


I agree, but I also think that this is true of most things that can get you into debt: Some people will use them responsibly and some will not.

As long as banks are greedy (forever) it will always be like this. Have you ever heard of a bank that will shut down a card because a payment is 30 days overdue?

"Dear Mr. Swim, we'd like to inform you that your account has been suspended due to an overdue payment. We are well aware that you have $5000 remaining on your limit, but we'd never want you to get in over your head... just think of the fees we'd have to charge!"

Hah. Just remember, I like my rewards as much as everyone else, and these days I'm smart enough to pay it off every month, but those rewards would either:

1. Not exist
or
2. Be a fraction as lucrative

If everyone else was responsible with their card. You don't make something from nothing. Don't ever forget that.

-Swim
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As long as banks are greedy (forever) it will always be like this. Have you ever heard of a bank that will shut down a card because a payment is 30 days overdue?

American Express; happened to a friend of mine. He missed his payment and they "turned off" his card.

Minxie
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Huh... well...

huh...

-Swim
/generalizations are great until this happens :)
//not often speechless...
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-Swim
/generalizations are great until this happens :)
//not often speechless...


Yeah, it surprised me, too... ;-)

Minxie
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American Express; happened to a friend of mine. He missed his payment and they "turned off" his card.

Was it a credit card or a charge card?

Charge cards are required to be paid in full each month, so missing a payment would tend to invoke shutting down the card.

AJ
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Was it a credit card or a charge card?

Charge cards are required to be paid in full each month, so missing a payment would tend to invoke shutting down the card.


It was a credit card. It was turned off because he missed a payment, not because he was carrying a balance.

Minxie
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It was a credit card. It was turned off because he missed a payment, not because he was carrying a balance.

Actually, by missing the payment, he was carrying a balance, so I'm not sure that 'carrying a balance' is necessarily ruled out as a reason. It would be extremely unusual for a credit card company to turn off someone's card for a single missed payment, with no other issues, such as being overlimit, or a change in purchasing patterns that might indicate that the card was stolen or being used fraudulently.

AJ
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Actually, by missing the payment, he was carrying a balance, so I'm not sure that 'carrying a balance' is necessarily ruled out as a reason. It would be extremely unusual for a credit card company to turn off someone's card for a single missed payment, with no other issues, such as being overlimit, or a change in purchasing patterns that might indicate that the card was stolen or being used fraudulently.

That may be true; it wasn't my card so I don't have all of the pertinent details.

Minxie

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My sister had the same thing happen with American Express. She was on vacation and forgot to send the payment. The card was frozen until it brought up to date.

Debra
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My sister had the same thing happen with American Express. She was on vacation and forgot to send the payment. The card was frozen until it brought up to date.

Do you know more specifically if it was a charge card, as AJ suggested, or a credit card? That would be interesting to know.

Minxie
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Do you know more specifically if it was a charge card, as AJ suggested, or a credit card?

Not absolutely certain, but I believe that it was a credit card.

Debra
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I'd like to be able to do this. I use the Hilton Amex card & am saving up points for a dream vacation. I put everything I possibly can (that I would have bought anyway) on my Amex & pay it off every 2 weeks. Adding the mortgage would really get me there quicker!
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I'd love to be able to put my rent on my credit card. Technically, I can but when I asked about it I found out that there's a fee involved. Unless the fee is less than whatever rewards your card gives you, it's not worth it. In my case the fee is like 2.5%. I get 5% cash back for gas and groceries but only 1% for everything else so it's not worth it.
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