Amex Business Credit Cards No Longer Allow Balance Transfers
In what could be a portent of things to come, American Express has sent notice to all of its OPEN small business credit card holders that it will no longer process balance transfers or convenience checks. In card holders’ November statements is the notice:
Effective immediately, Balance Transfers and Convenience Checks against OPEN Credit Card accounts will no longer be accepted or available. This includes requests made by phone, online or through the use of Balance Transfer, Convenience Checks and Cash checks.
I called Amex and they confirmed that all small business credit cards are affected, including new accounts.
This is clearly bad news for small business owners. In the current economic climate, businesses can no longer rely on their open lines of credit to be there when needed. Businesses would be well advised to hold adequate cash reserves, have lines of credit from multiple creditors and if necessary, to draw on these lines in advance of when they are required.
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Yes, clearly bad news. Now business owners will have to be more responsible for their own cash flow rather than relying on lenders who charge reasonable rates. These policies were likely enacted to help encourage responsible lending practices in both the business owners as well as the credit institution.
Convenience checks are one of the worst ways to use your line of credit, and as such the rates of indeed increased exponentially the last few years.
The simple fact of the matter is that it costs more to process checks now as the use of checks is becoming obsolete. If you want to use a check, I recommend using a bank account, and either making sure that you have enough money in the account before writing a check(like a responsible adult) or making very sure that you have an overdraft protection program that will cover the costs if you accidentally go over your balance. Be ready and sure that you can pay the fees and negative balance off as soon as possible though, or it becomes a downward spiral of irresponsibility.