11-17-2012 01:37 PM - edited 11-17-2012 01:38 PM
I know a few people say that Amex charge cards are easlier to get than their revolvers, but why is this so? Why are charge cards less of a risk for amex than their revolvers? I mean....one can burn amex with a charge card just as easily as one can max out one of their credit cards and only pay the min. balance each month or not pay at all.
Can someone please explain to me Amex way of thinking?
11-17-2012 02:16 PM
I've been a "Basic Green" charge card holder since 5/1999, switched to Gold charge, switched back to basic Green, & have been very happy with it. Based on my spending, AMEX constantly offers me the Platinum charge card, but I just can't reason with a $450.00 annual fee (they push it based on my overall spending). Typically I spend around $1100 - $1500 monthly, but I don't understand either how carrying a "charge" card is any less risky that someone with a revolving credit card. AMEX is going to be happier if you pay them long before your due date & just keep them aware if you have any "unusual" spending by calling ahead in respect to good relations.
IMHO....either way is a risk.
11-17-2012 02:36 PM
In general, people put amounts on charge cards they believe they can pay off within 30 days. The number of things that can go wrong in 30 days is limited. However, lots of people buy a big screen tv at Xmas planning to pay it off over a year, then lose their jobs 6 months later, get sick, etc. You are right that someone can do damage with either a charge or revolver, but most people don't intend to default (if you are spending beyond your means in 30 days, there is at least a willful disregard, if not an outright intent). Also, the buildup of debt over time is more pernicous than the sudden assumption of debt. Since charge cards don't allow debt to accumulate over time, they also eliminate this risk. Anyway, Amex also has a statistical model that predicts default risk and the fact that many of us have much higher internal limits on our charges than we do limits on our Amex revolvers at least implies that there is statistical support for the idea that defaults are less likely with charge cards. For example, I have a zync that I've charged 11k at a pop without any issue, but was given an initial cl of 1000 on my hilton revolver. Those decisions are made by computers, and computers are limited to risk models.
11-17-2012 02:37 PM
Charge card demands the entire balance to be paid off. It does not allow you to defer some balance for later payment.
11-17-2012 03:12 PM
11-17-2012 03:25 PM
charge cards you buy what you know you gonna be able to pay in full by due date.
revolvers lets you buy more than what you can have in your checkings and carry it for months.
if you planning on burning amex tho i guess you can do it with both.
11-17-2012 03:49 PM
The thing is , I totally get that it is technically less of a risk since you must PIF every month , but you can just as easily run up a bill and never pay it....so it is still just as much of a risk in my book xD
It's probably based on Amex experience over the years, and they find that charge customers are less prone to default. As others have said here, that's probably because charge customers at least intend to PIF when they purchase, when many revolvers are planning to pay back over time, with all the increased risk that that entails.
Also, don't know if this is true, but could credit laws make it harder to go after defaulting credit customers than charge customers?