I’m a bit cynical of the argument that charge cards contribute to fiscal responsibility. Now, to be clear, I do believe:
1. Broadly speaking, people spend more when paying with credit than with cash.
2. Careful budgeting and paying for stuff with paper (technically, cloth) money instead of plastic (or metal) does work for a lot of people. Using jars or envelopes as sub-accounts for rent, food, clothes etc. can work.
3. Some people will spend irresponsibly no matter what the method of payment they use.
4. Having the paper trail that a credit card creates can be useful and convenient for some people.
5. If you’re spending responsibly, credit card rewards can be nice.
6. Planning purchases (like a grocery list) in advance can help reduce overspending. This is the one that really works for me.
But I’ve heard people say here and elsewhere that spending using a debit card or a charge card can instill “cash-like” behavior. I wouldn’t assume so. The research I found is of limited relevance here in that it compares only cash and credit cards in general as payment methods. Furthermore, there are several complicated factors that affect purchasing behavior other than the ability to pay for the purchase over several months.
I’m not aware of any research that investigates whether using a debit or charge card makes a person act more like a cash user or a credit card user. I’m inclined to think it’s more like credit behavior. Signing a slip of paper to authorize a $100 debit charge for me doesn’t feel 10x as involved as signing one for a $10 charge, but paying for something with 10 $10 bills is a lot more involved than paying with one $10 bill.
I see a second problem with the charge card responsibility argument. I have seven credit cards (or, technically, six credit cards and one charge card). I use most of them in any given month, and I always pay in full. When I’m choosing which card to use for a particular transaction, I generally go with the one that will give me the best rewards or perks.
If I was contemplating buying something I really shouldn’t, I don’t see how having that charge card in my wallet makes any difference in whether I buy it or not. If I was tempted to buy something I couldn’t PIF on and would have to carry a balance, then wouldn’t I have to close all my revolving accounts so I wasn’t tempted to use them? I’d have to only carry a charge card and make all my purchases with it. I’ve heard a lot of people praise charge cards for the responsibility they allegedly encourage, but I’ve never heard anyone take the next ‘logical’ step of swearing off revolvers completely. To me, that seems like a recovering alcoholic praising the benefits of tea while keeping cases of alcohol in the house. If someone is especially vulnerable to a temptation, keeping it around all the time can be a recipe for disaster in a future moment of weakness.
That’s assuming that a charge card instills cash-like behavior, which I doubt. Furthermore, since an Amex Green or Gold card has minimal rewards and perks compared to other rewards cards (especially other cards with annual fees), there will be another temptation for an over-spender to use a revolving card with better rewards instead of a charge card. I won’t extend that claim to PRG and above because those cards can give excellent perks in some cases that outweigh regular points or cash back.
Maybe there are other factors I'm missing that help charge card users spend more responsibly, but I suspect the effect is pretty small.
If you don’t have the responsibility to avoid buying things you shouldn’t, I just really don’t think a charge card will make a big difference. There’s cash, and then there’s everything else.
One frequently cited paper anyone can read (no paid database subscription is required): http://web.mit.edu/simester/Public/Papers/Alwaysleavehome.pdf