- Your monthly bill must be paid in full. Your entire balance is due on the due date, meaning you can't roll debt over into the next payment period in exchange for paying interest. This eliminates the ability to carry long-term debt and introduces more discipline into the equation: If you can't afford to pay for something, don't buy it with a charge card. Think of it as a convenient way to make purchases or a vehicle for earning rewards, rather than as a borrowing tool.
- There is no interest charged as long as you pay your bill on time. If you pay late, there is a penalty fee rather than an interest charge. You may also be prevented from making new charges until you pay.
- Charge cards offer benefits that you won't always find on credit cards, including robust purchase and travel protections and roadside assistance.
- An annual fee is always required, since the issuing bank is not making any revenue off interest charges from cardholders carrying a balance.
- You often have no preset credit limit – in other words, you have a dynamic credit line that adjusts to your monthly spending needs. That doesn't mean you can just charge however much you want, though; your issuer will be monitoring your purchasing and payment habits to determine how high it will let you go. If you make a huge purchase that's out of the norm, it may be declined.
Which are recommended for 2015?
So, which charge cards should a savvy consumer consider? The Premier Rewards Gold Card and the Platinum Card from American Express are popular choices according to feedback gathered on the forum. These two cards have long been known for delivering an array of travel and entertainment benefits along with favorable customer reviews.
Here are some of the benefits that both cards have in common:
- Membership Rewards Program – The charge cards from AmEx earn "Membership Rewards" points, which have the potential of being more valuable than your typical credit card reward points. Why? Because you can transfer Membership Rewards points to more than 20 hotel and airline loyalty programs. You often get 1 mile or 1 hotel point in exchange for each Membership Rewards point, with a few exceptions, meaning your point value won't usually get diluted. The Membership Rewards program has a bunch of other redemption options, too, including merchandise and statement credits. However, the value of your points will vary, depending on how you redeem them.
- Purchase Protection – This covers your qualifying new purchases for the first 90 days if something happens to them – if they're stolen or accidentally broken, for example. Some regular credit cards also have this benefit, but coverage limits on premium charge cards tend to be higher.
- Extended Warranty – You get up to one year of extra coverage if you buy a qualifying item that has a manufacturer's warranty of five years or less. So if you bought an eligible computer with a one-year warranty, you could get up to one additional year of coverage for no extra cost.
- Roadside Assistance – If you have the Premier Rewards Gold or Platinum, this benefit covers the cost of roadside assistance up to four times per year for services including towing (up to 10 miles), flat tire changes (assuming you have a spare), jumpstarts and more. Generally, credit cards provide a hotline you can call for help, but won't actually cover any of the costs.
#2 Recommendation: The $450 fee may not be worth it to you, and the rewards-earning rate is on the low side (1 point per dollar). But if you are a frequent traveler (especially if you are a road warrior business traveler) you might get a lot out of the card's perks, especially if you like to stay at high-end hotels and enjoy airline lounge access.
What's the recommended offer if you still want a credit card?
If you're interested in getting an American Express card, this product (although not a charge card) has a reasonable annual fee given its benefits. I have received positive feedback from people newer to credit or who have less impressive credit histories (and who were approved). So it can be a good choice for your first American Express card. It probably makes sense only if you live in a market serviced by Delta Airlines, though.
Are there any other charge cards available?
Yes – and even though they aren't generally considered to be the top charge cards on the market, for some consumers they might be an appropriate choice:
Diners Club – Diners Club issues both credit cards and charge cards for consumers and business clients. Its charge cards have some unique benefits, including discounts at car rental companies, international cellphone rental and private jet access.
AmEx Green Card – While it's true this is a good starter card (and possibly a foot in the door if you're trying to get one of AmEx's top-tier charge cards), the annual fee still $95. That makes it more than half the cost of the Premier Rewards Gold card, which has bonus categories that help you earn more rewards per dollar spent and comes with a bunch of other perks. So, if your credit qualifies, consider that before you go for the Green card.
Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author’s alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.