Charge Cards – A Better Way To Control Spending?

Human first started using coins for currency around 7,000 years ago. It wasn’t until about 960 A.D. that we began using paper currency. Today, we’re also seeing a paradigm shift in currency unfold before our eyes… the move from cash payments to card payments. In many developed nations, paying with credit cards is now more common than using cash. While they may be convenient, unfortunately they also tempt us to spend beyond our means. Is the charge card a better solution? Well, let’s take a closer look…

Credit Cards vs. Charge Cards
Some people use these terms interchangeably, but they are actually two completely different things. A credit card (the most common) allows you to spend up to a certain limit. At the end of the month, you have the ability to either pay the balance in full or carry it over and pay interest. With a charge card, you don’t have this option; its balance must be paid in full every month.

Both types of cards have their pros and cons. For example, credit cards rarely ever charge an annual fee. However the most popular charge card in the United States – the American Express Gold Card – charges an annual fee of $125.

Meanwhile, charge cards tend to offer benefits which you will not find with any credit card, hence making their annual fee worthwhile for some people. For example, with the American Express Gold Card or Platinum Card, eligible purchases are protected for 90 days after purchase from accidental damage and theft. Cardholders also get a broad array of other unique shopping and travel benefits.

Who Would Benefit Most From a Charge Card?
According to Diana Wheeler, a staff writer at CreditCardForum.com, there are two categories of people that will typically benefit from a charge card:

People that overspend: Since charges are due in full each month, you no longer have the temptation of spending beyond your means.

People that travel frequently: For those that travel frequently, then the travel benefits offered by charge cards may be worth the annual fee.

Diana goes on to say “While it’s true the American Express Gold does offer quite a few benefits, it’s important to weigh the benefits against the annual fee. Upon reviewing the benefits, do you think you will get your money’s worth? If not, then you may be better with a charge card that has a lower annual fee, like the American Express Zync Card.”