Charge card question

[Discover2016]

When I started establishing credit last year one of my early choices was an Amex charge card which I love. It prevents you from spending too much since you have to pay it in full and it also helps me build history with Amex, it was win win.

PS, I am pretty sure that if I didn't have my Amex charge card I wouldn't have been approved for my BCE, so the payment history with Amex is a bonus.

[takeshi74]

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@Anonymous wrote:

For someone starting to build credit, is charge card a great option?  

Any cards that you can get with little or no credit history will either be secured or have a low CL.  

Now, keeping in mind your credit utilization should be 0-10%, it would be really hard to rely on those credit cards unless you keep paying them off multiple times a month.

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They can be.  "Great" is always highly subjective and it's no different with charge cards.  They are not one-size-fits-all.  As with any card, one needs to use one's specific needs/wants to find cards that suit the individual.  If one doesn't have the responsbility to manage a charge card that has to be paid in full then one can easily get in trouble.  That said, one can also get in trouble with credit cards as well.  The latter just offer a little more leeway in that one can carry balances.  Granted, Pay Over Time is an option for some with AmEx charge cards, but not all.

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@Anonymous wrote:

They have an internal preset spending limit which will most likely be higher than the CL you get on your credit cards at this point.

Not necessarily.  Don't just assume.  It all depends on one's credit profile, income and whatever other factors AmEx considers.

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@Anonymous wrote:

Thanks but how will credit build with a charge card since it has no preset CL?

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Limits are not the only factor that matters with one's credit profile.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

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@creditguy wrote:

Honestly I doubt Amex would approve someone for a charge card who is starting to build credit.

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My first card was an AmEx Gold but that was a long time ago.  My MSD is 1998.  Our understanding is that AmEx's charge cards (aside from the Centurion) have easier underwriting requirements than many of the credit cards.  Many find that they are able to qualify for an AmEx charge card and not a credit card.

[SouthJamaica]

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@Anonymous wrote:

For someone starting to build credit, is charge card a great option?  

Any cards that you can get with little or no credit history will either be secured or have a low CL.  

Now, keeping in mind your credit utilization should be 0-10%, it would be really hard to rely on those credit cards unless you keep paying them off multiple times a month.

So, are amex charge cards a great option?  They have an internal preset spending limit which will most likely be higher than the CL you get on your credit cards at this point.  Also, you do not have to worry about credit utilization.  Can you pay a charge card before you use it or it not advised to do so?

Thanks.

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They are terrible for that purpose, because they don't report a credit limit so it can't help your utilization.

I personally find them pretty much useless, unless you're able to make great use of their perks and rewards, which I'm not.