American Express Plum Card: 1.5% Rewards and Deferred Payments for Businesses
The Plum Card comes with a giant gotcha. Read about one business owner’s experience on the NerdWallet forum…
The Plum Card from American Express has a unique feature that most other business credit cards don’t: a business can choose on a monthly basis whether to earn rewards or to defer payments. This is a huge advantage for small businesses, which thrive on uncertainty and oscillate between being strapped for cash and flush with money. The Plum card allows a small business owner to decide what his or her business needs on a month-to-month basis, rather than having to decide upfront whether the card will be used as a source of capital or rewards. Even though on its face, this charge card isn’t necessarily the most obvious choice for a business card, we’ll make the case that if you need some flexibility, the Plum might just be the right card to grow your business.
How it works: a month-to-month choice between rewards and breathing space
Lean times: The Plum is a charge card, which usually means that you have to pay your bills in full each month or face ridiculously high (35%+) interest rates, and you have no pre-set spending limit. However, the Plum has a feature rarely seen among charge cards: you can defer your payments if you’re strapped for cash at the moment. Here’s how it works: if you pay 10% of the amount you owe for that month, plus everything else you may have deferred, you can wait another billing cycle to pay the other 90% of what you owe without paying interest or late fees.
Let’s say that last month you deferred $15,000 in payments, and this month you’ve racked up $20,00 in expenses. It’s been a slow month, and you can’t make the $3,500 payment. The Plum Card allows you to pay $17,000 (that’s the $15,000 from last month and 10% of what you owe for this month) and wait a month before paying the remaining $19,000. This is almost a better deal than low APR business credit cards, since you’re charged no interest at all. The one downside is the $185 annual fee, which is waived the first year. As we’ll see, though, the fee comes with some not-insubstantial perks.
Boom times: If your business is raking in cash and you’ve paid off all your bills, given bonuses to your employees and taken the entire company out to Benihana’s, you can earn rewards with the Plum Card. If you decide you don’t need the deferred payment option, you can earn 1.5% back on eligible purchases made that month if you pay everything you owe within 10 days of the billing date. Many low APR cards have pretty low rewards, somewhere along the lines of 1% back. The Plum gives 50% more rewards, if you’re so inclined.
Note that you receive the rewards only if you pay within 10 days of your billing date, meaning you need to pay your bills early. But not too early. The 1.5% back is applied only to your balance at the end of each billing period. Payments made earlier than 10 days before your billing date will NOT earn cash back. It’s a little tricky. Basically, to optimize rewards, you need to pay within that 10-day window. Not before. Not after (obviously). The cash rewards will be credited to the next month’s statement.
The perks: the full AmEx suite
American Express offers high-end cards, and so delivers some high-end benefits. Like any other AmEx card, you shouldn’t judge the Plum based solely on the rewards rate and/or APR. A substantial portion of the value comes from the fringe benefits, which we’ll detail below:
- A $200 credit to spend with select business partners, including Yahoo Small Business, Monster, and LegalZoom
- 90-day purchase protection against lost or damaged goods
- Return protection – if the seller won’t take an item back, AmEx will reimburse you
- One-year warranty extensions
- Roadside assistance – AmEx will help arrange and pay for towing, changing tires, etc.
- Baggage insurance
- Rental car insurance (AmEx provides some of the best credit card rental insurance, compared to the other three major networks)
- OPEN Savings discounts: earn 3-10% back when you shop through AmEx’s website. For example, earn 3% back at FedEx, 5% back at the Ramadan, and 10% back at Hertz
These perks are what make the annual fee worthwhile; that, and the flexibility to choose whether your business is pinching pennies or very, very cash flow positive. In this volatile business climate, the ability to decide month-to-month is invaluable.
Other cards to consider:
|Capital One® SparkSM Cash for Business||Ink Cash® Business Card|
|Get a $100 cash bonus-just for spending $1,000.||Earn $200 bonus cash back after you spend $3,000 in 3 months from account opening|
|Intro APR Promo|
|0% Intro APR on purchases and balance transfers for 6 months|
|$0 intro for first year; $59 after that||$0|