What Are Amex Charge Cards?

American Express offers a series of cards that don’t typically have a stated credit limit and generally require that the balance be paid in full each month. These cards include the following:

• American Express Green Card (Business and Personal)
• American Express Gold Card (Business and Personal)
• American Express Platinum Card (Business and Personal)
• American Express Centurion Card (Business and Personal)
• American Express Plum Card (Business Only)

Due to the addition of Pay Over Time, you can now choose to carry a balance up to your Pay Over Time credit limit, making it more similar to traditional credit cards. Based on the card agreement, the Plum card does not appear to offer Pay Over Time, unlike the other charge cards on this list.

What is the Plum Card?

The Plum Card is designed for businesses that need 60 day terms for their business spend. There are 2 possible options for this card: You can pay it in full within 10 days of your statement date and receive 1.5% cash back, or you can take 60 days to fully pay off the card with no interest and no rewards.

This card has a $250 annual fee and a public welcome offer of $500 after spending $15,000 in the first 3 months, for a return on spend of slightly over 3%, which is very low for an intro bonus, and makes the card not worth pursuing if you are only looking for large intro bonuses.

Who is the Plum Card for?

If you pay off your business credit cards in full, the Plum card is a definite pass in my opinion since you can get 1.5x-2x transferable points with other cards, which can easily be worth 3%-4% back when using transfer partners. Examples include the Chase Ink Business Unlimited, which has no annual fee and 1.5x Chase Ultimate Rewards points, or the Venture X Business ($395 annual fee), which is a charge card that does not allow you to carry a balance, but will earn 2x, as well as give you lounge access, 10,000 bonus miles each year, and a $300 annual travel credit.

If you need to carry a balance for longer than 60 days, this card also will not be helpful, since you must pay the balance in full within 60 days due to not having the Pay Over Time feature available.

For businesses that regularly need to carry a balance for 30-60 days, it is possible that the Plum card could be beneficial, so let’s take a look at an example:

If you have $50,000 in annual business spend and choose to take advantage of the 60 day terms, the only additional cost is the $250 annual fee and the opportunity to earn rewards on that spend.

Let’s compare with the Blue Business Plus, which earns 2x on up to $50,000 each year. If you spent the same $50,000 and accrued 60 days worth of interest at 20%, you would pay approximately $1671. Subtracting the $250 fee from the Plum card, since the BBP doesn’t have an annual fee, that leaves you with $1421 in interest paid, as well as 100,000 Membership Rewards points. This means that you would have to get a redemption value of 1.42 cents per point in order to break even.

This does not take into consideration that interest on business expenses is tax deductible, and the points are not considered taxable income (although they can affect the deductibility of expenses if you use them for business travel). Assuming that your combined state and federal tax rates are 24%, you would reduce your taxes by $401, which gives you a net cost of $1020 when compared to the Plum card, so any redemption above 1 cent per point on the 100,000 MR points gives you a better outcome.

In addition, the BBP has an intro offer is 15,000 points and the card has a 12 month 0% APR in the first year, making the first year value much higher than the Plum card due to not having any interest while still earning rewards.

If you pay any of your spend before 60 days have passed, you are in a higher tax bracket, or can get a lower interest rate with a different card, then it makes the Plum card even less favorable by comparison.

Final Thoughts

If you are unable to find a card with a low interest rate, you spend a lot for your business, and you can’t pay within 30 days but can pay with 60 day terms, you may benefit from the Plum card. For everyone else, it is likely that you’ll come out ahead with other options, such as a business line of credit or a rewards credit card as mentioned above.