topic Re: What are the benefits of having a charge card? Am I missing something? in Credit Cards

What are the benefits of having a charge card? Am I missing something?

valley_man0505 — Fri, 22 Jun 2012 21:29:13 GMT

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.

Re: What are the benefits of having a charge card? Am I missing something?

Anonymous — Fri, 22 Jun 2012 21:39:50 GMT

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.

Re: What are the benefits of having a charge card? Am I missing something?

Jlu — Fri, 22 Jun 2012 21:55:56 GMT

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.

Re: What are the benefits of having a charge card? Am I missing something?

Anonymous — Fri, 22 Jun 2012 21:57:57 GMT

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

Re: What are the benefits of having a charge card? Am I missing something?

Repo-ed — Fri, 22 Jun 2012 22:59:23 GMT

@Anonymous wrote:
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

Re: What are the benefits of having a charge card? Am I missing something?

bichonmom — Fri, 22 Jun 2012 23:23:39 GMT

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.

Re: What are the benefits of having a charge card? Am I missing something?

webhopper — Fri, 22 Jun 2012 23:34:22 GMT

I like the cash flow management it provides me when setting up my monthly cash flow spreadsheet. Also enjoy the NPSL and being able to use the card for reimbirsible work expenses. Also; I plan to take advantage of amex business products later.as well as an amex revolving account later; so building the relationship with amex is important.

Re: What are the benefits of having a charge card? Am I missing something?

Cdnewmanpac — Fri, 22 Jun 2012 23:34:27 GMT

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.

Re: What are the benefits of having a charge card? Am I missing something?

webhopper — Fri, 22 Jun 2012 23:37:46 GMT

Its nice knowing that I can charge more than 5k on a card and not worry about the utilization affecting my scores.

Re: What are the benefits of having a charge card? Am I missing something?

Revelate — Sat, 23 Jun 2012 00:17:52 GMT

@webhopper wrote:
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 .

Re: What are the benefits of having a charge card? Am I missing something?

Anonymous — Sat, 23 Jun 2012 00:26:27 GMT

What exactly does AMEX Charge Card say on your CRs? How much of a boost is it if there is no CL?

Re: What are the benefits of having a charge card? Am I missing something?

cashnocredit — Sat, 23 Jun 2012 00:28:56 GMT

@Cdnewmanpac wrote:
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.

Yup. That's exactly how I think of it and I used a debit card exclusively for 10 years.

Re: What are the benefits of having a charge card? Am I missing something?

Revelate — Sat, 23 Jun 2012 00:34:12 GMT

@Anonymous wrote:
What exactly does AMEX Charge Card say on your CRs? How much of a boost is it if there is no CL?

There's more to FICO than CL's.

As Webhopper correctly pointed out, you can "hide" some utilization from FICO for tempoary expenses (like work reimbursing travel expenses 2 weeks later that happens to cross a statement boundary), or if you're in that grey period between your payment, and the statement cutting, just run expenses through the charge card and never have to worry about tracking and making an additional payment which may or may not clear and possibly ruin your pretty utilization setup (I'm being a little tongue-in-cheek here but it is valid). Underwriting on a loan application will still see it, but it won't affect your FICO negatively unless you get a '98 version which is semi-rare outside of maybe NFCU and a few others.

Anyway it fully counts as a tradeline, both for payment history purposes and for AAoA calculation; it just doesn't get factored in to the revolving utillization metric that almost all of us obsess over on this forum.

Edit: it still reports as revolving, but I think I recall hearing it as revolving - other? Anyway someone with an Amex tradeline will be able to answer that portion better than I.

Re: What are the benefits of having a charge card? Am I missing something?

webhopper — Sat, 23 Jun 2012 00:47:11 GMT

It reports as revolving; charge. With a 1 month term

Re: What are the benefits of having a charge card? Am I missing something?

Anonymous — Sat, 23 Jun 2012 01:03:17 GMT

The benefits of an Amex charge card over a debit card or using cash are numerous. Spend a few minutes looking over the Amex website for all the benefits associated with their charge cards.

Re: What are the benefits of having a charge card? Am I missing something?

CK_Charles_Lover — Sat, 23 Jun 2012 01:20:12 GMT

I use my charge card basically instead of a debit card now. Its like getting paid to use a debit card. I will probably be going to Europe for free just for swiping a card and paying no interest on it. I'd call that a benefit!

Re: What are the benefits of having a charge card? Am I missing something?

ztnjpv — Sat, 23 Jun 2012 01:23:59 GMT

I never carry balances....ever. Charge or Credit Revolver is all the same to me. The balance is zero at the end. For me, credit/charge cards are for:

-REWARDS

-convenience

'-REWARDS

-security

'-REWARDS

-perks

-REWARDS

If I need to buy something big enough that I can't pay for within a few weeks, I get a loan. That's it.

Sure, there are low APR cards to more easily and cheaply live beyond your means but I don't need those cards and many people don't.

Re: What are the benefits of having a charge card? Am I missing something?

android01 — Sat, 23 Jun 2012 05:04:31 GMT

Charge cards keep you honest. Just like a debit card. You don't spend more than you can afford to pay, which is why a charge card (AMEX) is my primary card. I use revolvers for emergencies or to float something that is necessary for more than a month, (iike a new heating/air conditioning system, which I had to do for 10K for two months). As others have mentioned, I'd rather use credit cards for rewards/cash back than debit cards or cash.