06-22-2012 02:29 PM
I was just approved for an Amex Zync, which initially had me excited because I was finally "in" with Amex. However, the more I thought about it, the more I wondered "how does a charge card really help me since I have to pay in full in each month?" I know it is always sound advice to only buy what you can pay for with cash, but, then, why not just pay cash in the first place (other than online purchases or something like that)? To me, the main benefit of credit cards is to have them for emergencies. For instance, if my car broke down, and I couldn't afford the pay the repair bill in one lump sum, credit would be nice. A charge card still would not solve the problem. It would "buy some time", but I would still have to pay for the repair in a lump sum.
Is there something I am missing? I could also see it being nice for business use or for someone who travels for work and gets reimbursed upon expense report submittal, but, other than that, I am having hard time getting excited about my Zync now since I won't be using it for anything like that.
06-22-2012 02:39 PM
You and I are on different sides of the fence with our philosophy about credit. LOL!!!
I don't ever want to carry a balance on ANY of my credit cards. I PREFER to treat all my cards like they are charge cards and PIF every month.
That's just the way I view credit.
06-22-2012 02:55 PM
Charge cards offer a much higher limit of spending whereas a credit card has a limit. Charge cards also force you to purchase only what you can afford, which is what you should be doing for everyday purchases. If you want to charge a large purchase you should finance it, not charge it.
06-22-2012 02:57 PM
06-22-2012 03:59 PM
The benefits are numerous. One, you build your credit. Also getting history with Amex will allow you to get their revolvers with a lower fico than otherwise. Two, all sorts of protections on purchase vs paying cash/debit card. Check them out. Three, you get reward points that few debit cards have these days. Four, while you can't revolve your balance, it should help with budgeting within the month
06-22-2012 04:23 PM
Another benefit that no one has mentioned is how it reports on your CR. Since there's no CL, it doesn't affect your util. So, yes, you do have to PIF. But the balance reporting doesn't ding your FICO like it would w/a regular CC.
I do think that the older TU FICO 98 may factor it in and uses your highest prior balance as your CL. But the more recent versions don't do that.
And the "in" with Amex isn't to be diminished. Plus, you'll now get backdating. So any future Amex cards you get will HELP your AAoA instead of lowering it, like a new CC can do.
06-22-2012 04:34 PM
06-22-2012 04:34 PM
I agree with the reasons above. I would also add that disputing a charge on a charge card is MUCH easier than disputing a charge on a debit card. Also, many banks restrict how much you can charge per day on a debit card. So making large purchases, even if you have the cash, is safer if done via a charge card. Think of it like a debit card with huge perks. You also need a credit card for emergencies: they complement each other, but don't replace each other.
06-22-2012 04:37 PM
06-22-2012 05:17 PM
Its nice knowing that I can charge more than 5k on a card and not worry about the utilization affecting my scores.
Heh, since you have to PIF anyway, doesn't that mean you simply got sloppy with your religious payments instead since you could've dropped it on that pretty NFCU card and still zero'd it anyway? (teasing!)
AP reimbursement timeline from your job notwithstanding .