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Q: I want a new car. And I want some credit card points. Will car dealerships accept American Express cards? I realize some businesses do not.
A: Most will, but not all. On top of that, some of the ones that do accept American Express will only accept up to a certain amount, such as $5000.
This isn’t only true with American Express. Dealers may be wary to accept any credit card because of the fees. The amount they allow may be enough to cover your down payment.
The auto industry is one of the few holdouts where they try to minimize the role of credit cards as a payment option. Possibly because the dealers are the ones trying to provide you with financing for your car. Possibly to keep down their own costs.
But if it’s not, you have a few options:
- Go with another dealer,
- Negotiate, or
- Use your debit card.
The reason car dealers don’t like to accept credit cards is because of the fees.
American Express is the worst of the bunch. Merchants have to pay a certain percentage (it differs between industries, but it’s about 3%) to American Express for allowing their customers to charge with their AMEX cards. When you think about the purchase of a car, that 3% or so is going to add up to hundreds of dollars.
If you want your miles and the dealer isn’t letting you put the entire purchase on your credit card, tell them that you’re going to shop around.
If this doesn’t persuade them, check with other dealers in the area and see if they have a cap on paying with a credit card.
If all of your local dealers have a cap, you may miss out on a few of the credit card miles you were hoping for; but the interest rate you get with a car loan will probably be better than the one you have on your card, anyway.