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New Info Provided on American Express Statement – I Love It!

June 11, 2010 · 15 comments

in Personal Finance

I opened my American Express bill this month and I saw something new (to me) on the first page.  American Express provided a ‘Minimum Payment Warning’ along with a little grid, that displayed the following:

“If you make no additional charges and each month you pay only the minimum amount due, the balance shown on this statement (which was $6,662.90) will be paid off in about 25 years and you will pay an estimated total of $15,926.”

“If you make no additional charges and each month and you pay $238, the balance shown on this statement will be paid of in about 3 years, and you will pay an estimated total of $8,580.”

It then says you will save $7,346 if you make that payment of $238 vs the minimum payment.

Seeing this information got me wondering why American Express was providing such details.  At first glance I thought they were crazy because all that interest is how they make their money.  We pay our bill off every month, so they make nothing off us at all.  As a matter of fact, with our American Express Blue Cash Reward Card, they pay us about $1400 every year to use their credit card, and we get the money right before Christmas, which is pretty fantastic.  But  anyway, I always figured the credit card companies made a killing off those that only paid the minimum payment each month. I then originally submitted this post thinking that maybe so many people were walking away from their credit card debt, that maybe it was better financially for the credit card companies to actually have people pay more each month and fore go the money made off the interest payments.  In other words, American Express provided this information because a bird in the hand is better than whatever it is in the bush.  However, a well informed reader (thank you Greg!) commented that the credit card companies were forced to disclose this information as part of the Credit Card Accountability, Responsibility and Disclosure Act

(Side note, this post was then modified to include the information Greg provided.)

So even though the payoff  information was not provided altruistically by American Express, I am so glad that this data is readily available to credit card users.   Everyone knows in their head that high-interest cards can destroy you financially.  However, I think the real impact of only making minimum payments is much easier to understand when it is spelled out so clearly like American Express (and others) have been required to do.

Obviously I am late in recognizing this new feature on credit card bills.  Just curious, has reading the bill payoff information on your credit card bill made a difference in how much you pay on your bill?   Or do you always pay your bill off every month so it really doesn’t matter?

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{ 13 comments… read them below or add one }

Greg June 11, 2010 at 8:36 am

Hey Kris,

This is part of the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) that went into effect back in February. All credit card companies are now required to show you this information.

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Kris June 11, 2010 at 9:09 am

Thank you Greg! I was in the dark on this one for sure!!

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Budgeting in the Fun Stuff June 11, 2010 at 1:59 pm

We pay off our bill every month anyway, but I was glad to see the info since I’m sure there were a bunch of people who never really crunched the numbers for themselves before…

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Kris June 11, 2010 at 2:36 pm

BFS – I have always known the difference was big, but it really hit me when I saw it broken down like that. I obviously do not even look at my statement that often if I am just now noticing they provide that information. I just check my recent activity a few times a month online to make sure nothing is wrong, so I don’t really have to look at the statement that closely when it arrives.

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Money Reasons June 11, 2010 at 4:02 pm

We always pay off our balance in full every month too. But I use my rewards credit cards for everything! After all, they act as a cash discount on purchases!

I think it’s great that they disclose that information too. I’ve had friends and relatives that have carried large balances. I’ve tried to explain how much it’s costing them, but I don’t think they believed me. But when it’s right on the statement (hehehe), it’s hard to deny!

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Kris June 11, 2010 at 5:04 pm

I love my blue cash reward card. But I do wonder if I spend more money because I have a convenient credit card as opposed to using cash only…

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Money Reasons June 13, 2010 at 2:50 pm

For me, no. But I’m in the UPromise program, and I did notice initially that I would be more apt to buy grocery products that I normally wouldn’t buy. It was just one more reason for a yes answer to buy something. While I never went overboard, I did try a few items that I wouldn’t have normally.

But with my rewards credit cards, I’m too cheap to do extra spending to try and take advantage of the rewards 🙂 But I bet some people do!!!

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Revanche June 12, 2010 at 2:19 pm

I knew it was happening because of the chatter on the blogosphere about it, long before it was happening but I still haven’t seen it because I pay my bill electronically and only vet the purchases for accuracy.

I’m hoping that it’ll help people realize the gravity of their debt-burden but I know it’ll come back and bite the rest of us who milk CCs for the benefits and don’t “pay in.”

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Kris June 12, 2010 at 2:22 pm

Hello! I also wonder how long American Express will pay me to use their card. I guess I will enjoy it while I can.

You and I look at our credit card info the same way! I look at my purchases a few times a month to catch anything fraudulent, but usually don’t look at the front page of the statement.

Thanks for visiting!

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Young Mogul June 12, 2010 at 5:00 pm

The thing is…most people have switched to paperless statements, so unless this info is also provided on the electronic versions, most will never see it. I wouldn’t have ever known this had I not seen it here.

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christina December 16, 2010 at 1:46 am

Obviously they need to provide the whole transaction so atleast we aware of payments.

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For payment they should clear all the Do’s and don’ts.

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