Word: amex
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...latest revolution out of Boston pits recession-battered restaurateurs against charge-card giant American Express. Steve DiFillippo, owner of Davio's, where a Northern Italian veal-chop dinner for two can run $100, needed to pare costs. He threatened to turn away the American Express card unless Amex reduced its take -- 3.25% of every purchase, vs. 1.7% to 2% for Visa and MasterCard. Last week the combatants struck a truce when DiFillippo accepted Amex's offer of a 2.9% rate, saving him $11,000 a year. Amex also offered him $6,000 of advertising as part of a new nationwide...
...just because Karl Malden won't be brought to overbear on this doesn't mean Amex considers it unimportant. "Membership Savings will be the basis for establishing a broader financial relationship with Cardmembers," reads an internal marketing piece. "In time, we plan to offer several savings and investment products" -- IRAs and annuities, for example. With millions of affluent cardholders, Amex can quickly accumulate tens of billions of dollars in deposits with nary a bank branch or broken ball-point...
Membership has its privileges, but depositing money at 6.54% is a privilege Amex is willing to extend to anybody. (Not least because it can turn around and lend that money to its Optima cardholders at 16.25%.) Noncardholders won't be billed, but can make deposits by mail...
...fact is, almost anything that gets a nonsaver to save is a service, and for $50-a-month savers, 6.54% is a perfectly respectable rate of interest. The Amex plan is laudably efficient. Amex is already sending millions and millions of monthly bills and reply envelopes, already processing payments; millions of us are already having to pay those bills. Combining a savings deposit with the payment costs Amex next to nothing and saves us time, a check and a stamp...
Just promise me you'll withdraw your savings each time they build up past $1,000 and transfer them someplace that pays more interest. You promise? Sure. As Amex knows, many of you won't get around to making the switch. You'll forget; you'll agonize for months over where to put the money. Face it, sports fans: Amex, already the Babe Ruth of marketing, has found the perfect way to get folks to accept 6.54% on money that could be earning more...