I have the American Express One Card, which is a credit card and also a savings account and have had it for almost a year (unfortunately, I believe its unavailable right now to new customers). I really like it, and the only thing I hate about it is the annual fee. The transfers show up immediately. So, if I request a Friday transfer on Friday, the money immediately shows up when I request it and starts earning interest and the money gets pulled on the following Monday (or Tuesday of course if Monday is a holiday). Sometimes I find there can be technical glitches when your account is not available, but I haven't seen that lately.
BTW, I get 2.75% on my savings account, so its not a trick.
Might be a strategy by AMEX to get their cardholders to become deposit account holders.
That way, they have the right of setoff against anyone who may default on their AMEX credit accounts.
Remember if you have money in the bank where you have credit products, they can use your deposits to apply to your loans, without your consent.
xerty
Senior Member - 2K
posted: Jun. 20, 2009 @ 9:06a
Paying out 1-2% on bank accounts and CDs is so much cheaper fundraising for the cash-strapped mex than the debt markets it's not even funny. Institutional investors are loaning to AMEX at 7-8%, and even that's risky as indicated by their CDS rates (Credit Default Swap):
seeking alpha said: AXP sold $1.25BN of 5 year notes with a 7.25 coupon at 530bps over the current TSY of the same maturity and $1.75BN 8 1/8s maturing in 2019 at 505bps off the curve. The CDS levels in the 5 and 10 year area were 302bps and 234bps respectively. Notice here that as we discussed with GS the other day the CDS curve is still inverted with near term protection selling at a premium to the longer tenors. AXP is rated A3 and BBB+ by Moodys and S&P in that order. It sure is great to be a bank! You can "sell debt" to the American public via savings accounts and have the FDIC kick in a free 3% in annual default insurance, care of the taxpayers. I wish I were a bank.
pp12
New Member
posted: Jun. 20, 2009 @ 10:11a
xerty said: Institutional investors are loaning to AMEX at 7-8%
Sorry for the stupid question but how does AMEX turn a profit on their charge products if they are loaned money at a greater rate than the discount merchant rate? I know there are annual fees but I would have assumed that AMEX would need a real cheap way to fund their charge card products to turn a profit....
Matthew53
Member
posted: Jun. 20, 2009 @ 10:28a
pp12 said: xerty said: Institutional investors are loaning to AMEX at 7-8%
Sorry for the stupid question but how does AMEX turn a profit on their charge products if they are loaned money at a greater rate than the discount merchant rate? I know there are annual fees but I would have assumed that AMEX would need a real cheap way to fund their charge card products to turn a profit....
IF they were loaned money at a greater rate than the discount merchant rate, AMEX would likely not turn a profit. However, 7-8% ANNUALLY is lower than the ANNUALIZED discount merchant rate. Merchant rate is roughly a MONTHLY rate.
"Thank you for your application. We will contact you within 5-7 business days to let you know the status of your application"
Savemeister
Ancient Member
posted: Jun. 20, 2009 @ 10:43a
Well, whatever reason AMEX is getting into the deposit account business the products are competitive in the current enviroment. I applied for a new account(savings) because I'm concerned about ally staying competitive with the ABA intimidating them. Time will tell.
xerty said: It sure is great to be a bank! You can "sell debt" to the American public via savings accounts and have the FDIC kick in a free 3% in annual default insurance, care of the taxpayers. I wish I were a bank.
FDIC isn't free. Banks pay insurance rates based on solvency risk.
xerty
Senior Member - 2K
posted: Jun. 20, 2009 @ 11:27a
oopsz said: xerty said: It sure is great to be a bank! You can "sell debt" to the American public via savings accounts and have the FDIC kick in a free 3% in annual default insurance, care of the taxpayers. I wish I were a bank.
FDIC isn't free. Banks pay insurance rates based on solvency risk. True. It used to be 0.5-0.75% a year. I don't know what their fancy formulas say these days, but I'm betting it's still much less than 3%.
sethdallob
Senior Member - 1K
posted: Jun. 20, 2009 @ 1:32p
Matthew53 said: pp12 said: xerty said: Institutional investors are loaning to AMEX at 7-8%
Sorry for the stupid question but how does AMEX turn a profit on their charge products if they are loaned money at a greater rate than the discount merchant rate? I know there are annual fees but I would have assumed that AMEX would need a real cheap way to fund their charge card products to turn a profit....
IF they were loaned money at a greater rate than the discount merchant rate, AMEX would likely not turn a profit. However, 7-8% ANNUALLY is lower than the ANNUALIZED discount merchant rate. Merchant rate is roughly a MONTHLY rate.
Matthew
Huh? I'm missing the math there...if merchant rate is 3% of purchases, it's 3%, not 36%. AMEX makes money on people that pay 30% interest rates, annual fees, merchant fees, and a travel agency.
I opened an account as a backup to Ally. One thing to note is that they do withdraw their trial deposits, and they do it in two transactions, so if you link it to another savings account with limits on withdrawals, be aware of that. I just put enough money in to make sure I get $0.01 in interest per month, for the moment. I haven't been tracking credit bureaus lately (no real reason to), so I can't speak to the hard pull aspect.
Matthew53
Member
posted: Jun. 20, 2009 @ 4:28p
sethdallob said: Matthew53 said: pp12 said: xerty said: Institutional investors are loaning to AMEX at 7-8%
Sorry for the stupid question but how does AMEX turn a profit on their charge products if they are loaned money at a greater rate than the discount merchant rate? I know there are annual fees but I would have assumed that AMEX would need a real cheap way to fund their charge card products to turn a profit....
IF they were loaned money at a greater rate than the discount merchant rate, AMEX would likely not turn a profit. However, 7-8% ANNUALLY is lower than the ANNUALIZED discount merchant rate. Merchant rate is roughly a MONTHLY rate.
Matthew
Huh? I'm missing the math there...if merchant rate is 3% of purchases, it's 3%, not 36%. AMEX makes money on people that pay 30% interest rates, annual fees, merchant fees, and a travel agency.
Yes, you are missing the math. Let's use your assumption of a 3% merchant rate: Customer buys a product for $100 with his credit card. This means the customer now owes AMEX $100. AMEX pays the merchant $97. In about a month, customer will either pay AMEX $100 in full or he will not. If customer pays AMEX in full, AMEX has just earned more than 3% in a month (or more than 36% annually). If customer does not pay in full, AMEX still earns more than 3% in a month (or more than 36% annually) because AMEX is still owed $100 one month after investing $97, but instead of reinvesting the $100 in a new loan AMEX simply holds the original loan and earns additional interest on it.
Does anyone know how fast transfers are to/from the AMEX online savings account?
Savemeister
Ancient Member
posted: Jun. 24, 2009 @ 8:27a
budster said: Does anyone know how fast transfers are to/from the AMEX online savings account?
Well, My initial ACH transfer for funding posted the next day(But still not available). I have linked a couple new accounts and the trial deposits/withdrawals were both next day. I don't know the routing number for AMEX bank yet.....or do I know if you can push/pull money FROM an external account(I will call later for an answer) but so far I'm pleased with the website and the speed of external transfers.
Update: AMEX bank R/T # 124085066 CSR told me you can intiate transfer from your external(linked) accounts
I have the AMEX One and it has been very fast. It transfers out to the bank you want it to go to next day. For incoming, you earn interest on it immediately.
staci86
Senior Member
posted: Jun. 24, 2009 @ 9:04a
I can confirm that AMEX pulls a soft when opening this account.
I had the same experience with the above mentioned speed of trial deposits.
dwt79
New Member
posted: Jun. 24, 2009 @ 9:53a
For my initial funding and a subsequent incoming ACH, the funds posted to my account the next day, but were not available. The disclosure materials I received in the mail after opening my account say that funds will be available no later than the SIXTH business day after they are received. We'll have to see if there really is a six day hold in practice.
laipy
Member
posted: Jul. 17, 2009 @ 1:28p
It took at least 1 week the incoming ACH money became available for me. It looks that they did hold it for six business days. Outgoing is fast though, showing up in my external account the next day.
I have a feeling after i dump my money, it will drop to 1.75%
AMEX HYS rate drop today(07/23/2009) Was: 2.00% > 1.85% APY
Damn, I was choosing between AMEX and Discover Bank for opening an online savings account when their rates were both 2.0%. I chose AMEX (primary because I heard their ACH transfers were faster) and dumped money there, but now AMEX has lowered their rate, while Discover Bank still has the 2.0% rate.
I was so close...just had them answer my final questions this morning and was quite impressed by their quality of CSR. Get back home and sit down to sign up and see the drop to 1.85%. Oh well, I'm sure they will miss my "huge" deposit!
at least AMEX seems to have next day ach. faster than Ally.
Savemeister
Ancient Member
posted: Jul. 24, 2009 @ 4:09p
frank10b said: Seems like Ally Bank is a better deal.
I agree that ally is a great bank, but how long will their constantly falling rates be competitive? Unfortunately, I think ally is preemptively lower their deposit rates before the end of the year to avoid being forced by the FDIC into slashing rates to their "Published rate average" that banks that are sunstantially under capitalized are facing. We could see rate under 1% at ally by the end of the year.
return222
Senior Member
posted: Aug. 6, 2009 @ 2:21p
At least you can move your money in and out fast with AX. Next day ACH is fastest one I have used.
return222 said: At least you can move your money in and out fast with AX. Next day ACH is fastest one I have used. Is there loss of interest in either direction?
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