The American Express Plum Card is the latest business credit card issued by Amex. When it was first rolled out, it was offered to about 10,000 business owners. They were the so-called charter members. Now this card is available to the public. So what’s the fuss about this card? Let’s explore.
Cash Rewards – When the card first came out, they allowed card holders to earn 2% cash rebates. However, they have now reduced that to 1.5% cash rebates for every dollar that you spend on the card. However, to earn the 1.5% cash rebates, you would have to pay in full within 10 days of statement close. Hence, if your business is such that you pay in full, this is a great benefit.
0% financing for 60 days – If you do not wish to pay in full, the Plum Card gives you another option. If you pay 10% of your balance, you will not have to pay for 60 days for the remaining 90%. What this means in practical is that you have one additional month after you get your statement to pay off the 90%. The 60 days start from the beginning of the cylce. You get your statement 30 days after the cycle. You pay 10% and you have until next month to pay off the 90% that you carried over at no interest charges. This is obviously a better deal than ordinary credit cards because if you carry a balance, you are charged an interest. Since you are not charged 0%, it acts more like a proper line of credit.
Fees – This card comes with a $185 annual fee which is waived for the first year. There is no additional fee for the first employee card. This card has no pre-set spending limit.
What does Credit Card Detective Think? – There are a few ways to compare this card. One can compare it with other cash back cards. American Express has its own cash back business credit card with no annual fee, which pays 3% on gasoline and other business expenses and 1% on everything else. Chase also has the new INK business credit card that has a similar reward structure. My experience with cash back cards is that no matter what the formula, you will earn anywhere between 1.5% and 2% if you really utilize it well. The advantage of the Plum Card is that it is simple, has no tiers and pays you a rebate which you will most likely earn with other cash back business credit cards anyway (and BTW – most cash back business credit cards cap the rebates you can earn on items like gasoline!). The only disadvantage compared to cash back card is the annual fee.
But as a means of financing, the Plum Card beats all credit cards hands down. The reason is you could defer payment for 90% of the balance for one additional month at 0%. This is more like a true credit line.
The other advantage it has over other business cards is that there is no pre-set spending limits. This (and I cannot stress enough) is so important for businesses because you never know when you need working capital when you hit a big order or new customer (your lucky break?). From that perspective, $185 is a cheap fee to pay for the knowledge that the card has no pre-set spending limits. So even if all you are after is a cash back credit card, the annual fee is a cheap option for access to 0% working capital.
This card gets the thumps up from us for a cash back business credit card with the option of an extra months of credit line at 0%.