AmEx lets you put down payment on card

By Melissa Wirkus

Everyone knows that when you buy a house or condominium, you have to make a down payment that is a certain percentage of the value of the home.

Traditionally, you have to put down 20 percent of the home’s value initially, and the remaining balance consists of your mortgage, (unless of course you are a billionaire and put cash down, which is very unlikely). Normally you have to have a money order or a cashier’s check with the full value of the down payment waiting and ready before the house or condo is yours.

Now, a popular credit card is letting its customers put the down payment on their card, but of course there are some strings attached.

A September 13, 2006 article by Jane J. Kim of The Wall Street Journal, “AmEx makes room on its cars for down payments on condos,” explains the details behind this exciting new offer.

“Coming up with the money for a down payment on a new condominium may soon be as easy as charging it: American Express Co. is expected to announce today that it will allow some customers to use its cards to make condominium down payments.”

“For now, the service appears to be limited to a select few: luxury-condo buyers in Manhattan. American Express is rolling out the program with New York real-estate firm Moinian Group, for one of its properties currently under construction -- the Atelier condominium in Midtown Manhattan. Both companies say they plan to expand the service to other properties and partners.”

For the time being, this new deal will only be available to the people who are looking to buy in this particular complex, but it will only end up spreading to other properties if all goes well there.

Not only is it a lot easier to pay with a credit card instead of waiting for a money order, or driving to the bank to get a cashier’s check, but this high-end credit card company is also offering added bonuses.

“For condo buyers, the deal will allow them to earn reward points or frequent-flier miles on big transactions, while extending the amount of time they have to meet the down-payment requirements and eliminating the hassle of getting certified checks. Buyers will earn one point for every dollar charged.”

Another advantage to this program is that it is available to all types of card holders, not just platinum or gold. Of course, everything is dependent upon your previous spending history and credit-worthiness.

“Customers may run into a snag in some cases. If the amount charged is ‘widely out-of-pattern’ for the customer, then the transaction may be flagged until the company gets more information, a spokeswoman notes. Customers who hold AmEx credit cards -- such as Blue -- may be limited by their card's credit limits, which are based on their spending patterns and credit-worthiness -- although a spokeswoman says the company, in some cases, may extend the credit limit for the down payment.”

The program was started to attract customers to purchase high-end condos. But it is also a trend that is already being implemented around the country as many landlords are allowing tenants to pay their rent using a credit card.

“The move comes at a time when more landlords are allowing tenants to pay their rent with plastic. About 15% of the rental apartments in the U.S. accept credit-card payments, estimates Matt Golis, chief executive of YapStone Inc.'s RentPayment, a San Francisco processing firm that works with apartment owners and managers to enable acceptance of credit cards. Most of its new customers this year are offering to pay the costs incurred by offering credit cards as a payment alternative in order to have a competitive advantage over other properties, he says.”

In a world where credit cards seem to be the main form of payment, it will be interesting to see what will come next for cardholders – mortgage payments?

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