Why are Amex charge cards more "prestigious" than their revolvers??

[CreditScholar]

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@scenery_guy wrote:

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@CreditScholar wrote:

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@indiolatino61 wrote:

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@kmkotas wrote:
I know it is easier to get approved for a charge card but they are often viewed as more prestigious. Why? Is it because people assume you have money if its paid in full each month? Or because of the high annual fees? Can someone fill me in please? Also, I don't know why they are easy to get. I see them as being a bigger risk since people can't make minimum payments on them and keep charging away.

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IMHO, I don't see any difference in "risk" between a NPSL with a $1K internal limit, for example, on a card and a $1K revolver. With a revolver, you can slowly raise your balance to the $1K, by paying the minimum each month. With a charge card with NPSL, since you are paying the full $1K each month, it would suggest you are able to handle a much higher CL. I know people will disagree with this logic, but that is how I see it.

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There is a difference in risk. Let's look at the following scenario:

Person A charges 1k on a charge card (with a 5k internal limit), and due to unforeseen circumstances can only repay $200. If he doesn't PIF, Amex will likely cut off his card and he won't be able to charge anymore. The net result is that Amex is out $800.

Person B charges 1k on a revolver with a 5k limit, and due to the same circumstances can only repay $200. The other $800 is revolved after the $200 is paid, and person B can continue charging in the 2nd month. Net result: Amex is out $800 plus whatever they charge on the 2nd month, 3rd month, etc. The cutoff isn't as quick and automatic, thereby leading to potentially bigger losses.

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Unless you spend $50K a month on your charge card. Much bigger losses are possible in that example. I don't have a amex revolver with a $50K limit so I can only do it on a charge card. That one time $50K hit would be greater than if I maxed out all my amex revolvers and defaulted - by $19,300. 

The risk is greater with a charge card hence the low starting preset internal limit. That's the P in NPSL. I know, it says no preset limit but we all know it's preset FOR YOU based on your internal score. You earn the privilege to increase it by using it and paying it off. 

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I charge almost 50k every December and it works for me. I just pay it twice for that month, which is only once a year. It's no big deal really. If I did that more often and asked for a CLI, I'm sure it would be granted.

[bribro]

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@CreditScholar wrote:

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@scenery_guy wrote:

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@jzon450 wrote:

I think it's the annual fees... the benifits with Amex really aren't that great anymore, or not as good as they once were. Visa Signature cards now offer a lot of the same perks.

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Visa Signature perks? Oh really? Name them. I carry one as well as a World MC and have never used a single benefit. I have to look them up. $15 off $100 at Ace hardware. Fandango buy 2 get 1 free ticket. Yawn.

Platinum I use all the time:

$200 airline credit

Airport lounge access (big three carriers)

Priority Pass Select for those foreign non legacy carriers

Global Entry

Upgraded rental car status

Gold SPG status

Not meaning to be rude, just saying Visa and MC need to step it up. Sure a few very select Visa and MC offer a few very nice perks but chances are a Platinum amex is more obtainable than those select cards. 

However if I could only carry one amex it would be the Delta Reserve. Lounge access, free bag and MQM bonuses for milestone spends plus mile per dollar for all spend, 2X on Delta tickets. This card will put me within reach of Diamond this year - just on spend. Coach to BC or FC upgrades are the best perk I could ask for and no card offers them outright but this one comes very close. Who cares about prestige, I'll take the comfy seat and free drinks. 

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+1. Visa Signatures alone don't have that many perks, but instead it's the specific bank/card that will offer the most important ones.

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Exactly, Visa is just a network. Stripping out all the issuing bank's perks and features makes this a silly comparison since AmEx is the network and the issuer in most cases. jzon450 is absolutely right when he says, "Visa Signature cards now offer a lot of the same perks," most of those perks just happen to come from the issuing bank.

[HiLine]

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@scenery_guy wrote:

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@jzon450 wrote:

I think it's the annual fees... the benifits with Amex really aren't that great anymore, or not as good as they once were. Visa Signature cards now offer a lot of the same perks.

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Visa Signature perks? Oh really? Name them. I carry one as well as a World MC and have never used a single benefit. I have to look them up. $15 off $100 at Ace hardware. Fandango buy 2 get 1 free ticket. Yawn.

Platinum I use all the time:

$200 airline credit

Airport lounge access (big three carriers)

Priority Pass Select for those foreign non legacy carriers

Global Entry

Upgraded rental car status

Gold SPG status

Not meaning to be rude, just saying Visa and MC need to step it up. Sure a few very select Visa and MC offer a few very nice perks but chances are a Platinum amex is more obtainable than those select cards. 

However if I could only carry one amex it would be the Delta Reserve. Lounge access, free bag and MQM bonuses for milestone spends plus mile per dollar for all spend, 2X on Delta tickets. This card will put me within reach of Diamond this year - just on spend. Coach to BC or FC upgrades are the best perk I could ask for and no card offers them outright but this one comes very close. Who cares about prestige, I'll take the comfy seat and free drinks. 

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What you listed are not traditional credit card benefits. The Platinum benefits exist because you pre-pay for them with the annual fee.

I am guessing what jzon450 referred to is benefits that exist even in cards that do charge a maintenance fee. These benefits include warranty extension, car rental insurance, purchase guard, price protection, travel emergency assistance, concierge service, and travel insurance, to name a few. Amex used to be the only network that offered this type of benefits. Nowadays Visa Signature and World Mastercard cards offer more or less the same. 

[ztnjpv]

I think it's a self fulfilling prophecy of sorts. While the reality is that charge cards are easier to be approved for, it's counter intuitive and not well known. Sure, people on boards like this know this but that's not representative of most people.

So, as a result perception and the responsibility of having a charge card , more affluent demographics with strong credit and finances tend to apply for the charge cards...thus perpetuating the "prestige" factor.