American Express--Turn Purchases Into Savings. Give Me A Break!

American Express, apparently concerned with current savings trends in America, now offers a credit card that "turns purchases into savings." This "new kind of card" transfers a whole 1% of your purchases into a high-yield savings account. They are "giving" you $25 to jump start your new savings program and have also eliminated your annual fees, actually, only for the first year. Okay, so you're probably saying "Hey, that's great! Maybe I'll get that card and start saving some cash."

Let me be the first to tell you that you have fallen for it! For what? Please, stop. Think. In order for you to "save" money you need to spend money on this card that you probably won't pay off on a monthly basis. After the first year, you end up paying more than you spent, when they apply your new annual percentage rate that just so happens to be tied to the prime rate. Yeah, that's shocking. The annual fee after the first year also ends up being $35.

Please read the fine print. This high yield savings account is only 3.80%. That is a pitiful annual percentage yield when compared to the 6% to 12% you get from good growth stock mutual funds.

So before you leave home without it, stop and think. How can you save money while your spending it, with interest?