Travel And Entertainment (T&E) Cards

The travel and entertainment (T&E) cards, including the American Express, Diners Club card and Carte Blanche, can be used for several purposes other than just travel and entertainment. However, the scenario was different in the early days of the travel and entertainment cards in the 1950s. In those days, the utility of the travel and entertainment cards only included paying for your meals, hotel bills and travel expenses. Although the previous name continue to stick to these cards, these days the travel and credit cards can be used for an assortment of purposes as different kinds of stores now willingly accept these cards.

The travel and entertainment cards are different from all other credit cards on two aspects and they are as follows:

  • When you have a T&E card, you are entitled to a very short-term credit. Under normal circumstance, the longest period of credit one can avail with the regular T&E cards is a little less than two months.
  • The T&E card holder is not charged express interest on the credit when he or she avails a loan from them.

However, one need not be concerned regarding the T&E companies as they have several other means to make their money.

When you possess a travel and entertainment card, you are supposed to clear your bill within some 30 days from the day you receive the bill from the T&E companies. Hence, the maximum period granted to a T&E card holder to clear his or her bills is something less than two months. You are entitled to that much time to make your payments provided you make some credit purchase with a T&E cards just on the day after the billing for that particular month ends. For instance, supposing the credit card company closes all the statements on the last day of every month, when a T&E card holder makes a credit purchase say on May 1, he or she will not be billed by the company till May 31. And in this case, the card holder is free to make the payment anytime before June end. In fact, the same process is followed by all credit cards vis-à-vis the free ride period when they grant the card holder an extended period to make payments.

In fact, there are a number of ways by which a travel and entertainment (T&E) credit card holder may legally prolong making his or her payment over a longer period of time. However, do so require application of exceptional arrangements and they are never a component of the typical aspects of the travel and entertainment cards. It may be mentioned here that when a card holder employs the special programs to extend his or her payments, they are also required to pay an interest on the balance. An ideal example of such special program is the American Express Optima credit card.

Basically, there are three ways that provide the T&E companies with the major share of their earnings. And all these three ways may perhaps be described as owing or patronizing the T&E cards. First and foremost, all T&E companies charge their customers an exorbitant yearly fee. In fact, the T&E annual fee is actually an interest fee and it is really very high when the customer does not make lots of credit purchases using the travel and entertainment cards. On the other hand, the yearly fee also remains the same irrespective of the amount of charge the customer makes with the T&E credit card.

In addition, the merchants are required to pay an extremely large percentage, as much as 10 per cent, of all purchases made on the T&E credit cards to the company. Incidentally, no other credit card charges so high percentage of commission from the merchants. Recently, the charges have somewhat been reduced with the T&E companies looking for expanding the merchant acceptance of their credit cards.

Finally, the travel and entertainment (T&E) companies do not reimburse the merchants right away. Often these companies play the float (extending the payment period) holding up the money due to the merchants for as many as thirty days.

Benefits of T&E cards

Simply speaking, possessing a travel and entertainment (T&E) card denotes prestige or status. In other words, if you are too keen about prestige and honestly think that possessing a piece of plastic can enhance your status, you may go for the travel and entertainment (T&E) credit cards. In fact, the travel and entertainment companies spend millions of dollars each year on promotions that constantly make us believe that if we pay the bar tab with the T&E cards instead of cash or any other credit card, it will not only add to our status, but also make people look at us more approvingly. However, this cannot said to be the actual fact. It is up to you how you make your payments for the expenses you incur.

In fact, the actual benefits of possessing a travel and entertainment (T&E) card has nothing to do with prestige or status, but related to service, payments and other issues.

  • There is little doubt that to some extent the travel and entertainment (T&E) card companies offers better service to their customers and merchants. Generally, when you compare the performance of the customer service personnel of the different banks with those at the T&E companies, you will admit that the latter are mostly alert and on their toes.
  • The T&E card companies provide their customers with toll-free 800 numbers to enable them to call up the customer service department with their billing problems anytime. However, the lone trouble is that calling up the customer service folks at the toll-free numbers will not help you to protect your credit card user rights. In order to achieve this, you need to write to the travel and entertainment (T&E) card people. Legally speaking, if any customer fails to resolve his or her problem even after calling up the toll-free numbers, then they are simply having a bad luck.
  • The travel and entertainment (T&E) card companies provide exclusive services to their customers when they are traveling. In fact, the American Express seems to truly act on this aspect. Such special services provided by American Express includes cashing cheques, managing your mails, restoring misplaced or stolen credit cards quickly for those using Amexco cards in the United States as well as overseas. In fact, you cannot expect such exclusive services from any other travel and entertainment (T&E) cards or bank cards.
  • Another advantage of the T&E credit cards is that they do not have any fixed spending limit. Unlike the bank cards that always come with fixed spending limits for each month, in the case of the T&E credit cards there is no preset limit such as $2,500 or so. However, it needs to be mentioned here that 'no spending limit' does not in any way denote 'no limit' at all. The T&E companies keep a close tab on their customer's average charging or credit purchasing style and if they find that there is a change in the pattern or their spending going beyond the limit which they can afford to repay, the companies will soon curtail your 'spending limits'.

Shortcomings of T&E cards

The biggest as well as the most important disadvantage of the travel and entertainment (T&E) credit cards is the exorbitant yearly fees charged by the issuing companies.

The next biggest downside of the T&E cards is that despite an emergency it is very difficult to defer the repayment of the bills on credit purchase. And even if a customer eventually succeeds in getting an extension to make the payments, he or she has to go through a lot of hurdles. Deferment of the bill payments is only possible if a customer can think of a reason that will be accepted by the company. However, the payments may be extended for some time provided the card holder has a good history of making timely bill repayments. On the other hand, if you possess a bank card it is your privilege to delay the payments and this can turn out to be a good thing for the card holder if he or she has excellent strength of mind. It is, however, interesting to note that there are many people who prefer the T&E card companies' strict fiscal regulation of clearing the bills regularly every month.

Another shortcoming of the travel and entertainment (T&E) credit cards is that it does not offer a good foreign exchange rate when the customer is using the card overseas. However, these days even the bank cards are gradually drawing level with the T&E cards on this issue as they too are enhancing the expenses on credit purchases made abroad.

Again, in comparison to the bank cards, the travel and entertainment (T&E) cards can only be used in specific places. While the bank cards can be used at almost everywhere to purchase nearly everything, T&E cards can only be used in more pricey shops and restaurants. Normally, retailers offering rebates on purchases do not accept the T&E credit cards as the merchants often cannot afford to pay the exorbitant commission charged by the travel and entertainment companies on every purchase made with their cards. Contrarily, bank cards are accepted by almost every merchant across the globe. Another problem with the T&E cards is that the card holders find it difficult to avail cash advances or loans on these credit cards. Obtaining a loan against a travel and entertainment card is something next to impossible.

While it is possible to cash cheques at any travel and entertainment (T&E) credit card company offices anywhere in the world, it is impossible to obtain actual money on the card itself. Another problem is that apart from the American Express, one would it difficult to locate a travel and entertainment credit card company office in most of the places. Although Diners allows its customers to avail cash on their cards, but the company charges very high interest rates on such cash advances. Moreover, Diners or its affiliates actually have very limited offices around the world making your problem linger.

Finally, it is important to mention that, irrespective of the firm, the number of travel and entertainment (T&E) company offices are very few and far between. Although the American Express has the maximum number of offices around the world amongst all T&E companies, the number is still very insignificant compared to any bank issuing credit cards. As far as the utility of the credit cards issued by the T&E companies are concerned, they come nowhere near the bank cards, especially regarding availability of cash advances on the cards.

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