A excellent way to meet minimum credit card spend requirements is by purchasing gift cards from American Express. The gift cards can either be used yourself, or can be given as a gift with the holidays approaching. Either way, the gift cards come with a low fee (typically $3.95 per card) and you can often find promotion codes for free shipping. In addition, you can go through a cash back portal like Big Crumbs where you can earn 2% cash back for an American Express gift card purchase.
Usually gift card are coded as a purchase, just like any regular transaction. However, recently Amex gift card purchases are coded as a cash advance when a Chase credit card is used. Cash advances are extremely expensive as they are usually assessed an upfront fee of (4-8%) and begin incurring interest charges immediately. In Chase’s case they charge a 4% cash advance fee. Obviously this not only negates the 2% cash back you may have earned by going through Big Crumbs, but more importantly, this purchase will not count as a “purchase,” since it is coded as a cash advance! Finally, you will also not earn points or miles on this purchase as well.
What leverage you do have is that any time a vendor is going to charge a purchase as a cash advance they must be 100% clear upfront that they intend to process the transaction that way. In the case of Amex gift cards, and the purchase process on the website, there is no clear indication that a purchase will be coded as a cash advance. In fact, most people are reporting that purchases using other banks including Amex cards are coded as regular purchases. This leads me to believe that it is a technical issue where Amex probably made a tweak or change to their credit card processing system, which caused an issue with certain banks. Chase is one of the biggest card issuers, so their customers have raised the issue, but it may not be isolated to only Chase credit cards.
The most entertaining part about this is that the processing charges and shipping fees ($9.99 for overnight shipping) are coded as cash advances too!
What Should You Do If You Purchased an Amex Gift Card Using a Chase Credit Card?
According to Chase they are not responsible for how a merchant codes a transaction. They are simply fulfilling the request from the merchant on behalf of the customer. Therefore Chase’s policy is to not waive the 4% cash advance fee, and they certainly will not change the purchase coding from cash advance to purchase. There is no point calling Chase.
What I recommend that you do is call American Express at 866-268-0582 and request that the purchase type be changed from cash advance to regular purchase. You should explain to the representative that it was not clear upfront that the purchase was going to be coded as a cash advance, and you will dispute the charge through your credit card issuer if it is not corrected.
There should be an eventual resolution to this issue, but in the mean time I would take the following steps.
1 – If you have cash available, pay off the balance on your Chase card to reduce interest charges, which accumulate immediately.
2 – Call Amex and request that they correct the issue.
3 – Follow up with Chase to ensure that Amex changes the transaction type and that the cash advance fee is removed.