Charge Card vs Credit Card

[PaulZ]

I have always had an AMEX Credit Card but am thinking of getting a Charge Card.

With regards to Spending Power, their website simply says: "No Preset Spending Limit1"
"1= You are free to spend as much as you show us you can afford to repay. Proof of resources and security may be required."

Despite this, there must be some "credit limit" imposed? Or is it free reign?
Basically my question is, how does the provision of credit/spending power work?

Thanks in advance for any info!

Paul

 

[one9]

I have seen a few horror stories of people with Amex cards travelling and having their Amex cards declined.I would not think of it as no preset spending limit. I would think more of it as a changing hidden limit. Amex would have a more complex method, but basically I believe they set a hidden credit limit on your card based on your application. Then this limit changes each time month (or maybe each time you make a payment). So as you build up history with them, you get more limit.Personally I prefer the certainty of a traditional card where you get to know your limit upfront.A charge card would be good if you have a good existing relationship with Amex, and intend to spend similar amounts or a little larger amounts. I would not be confident of puting a very large purchase on it (eg. a new car or plane or something).

 

[jasonja3]

I think one9 is spot on with the credit limit calcs. My first large purchase on AMEX I called to let them know, the next time I asked they said "you have spent this much before, no problems". I stopped calling, and I roughly know my limit, based on previous spending.

Interestingly enough though, I have a Platinum charge card and put quite a bit through work and I pay for all my travel and accomodation with it, however I booked a CX flight online BKK-HKG-BKK for just over $1k, and the card bounced, because it was an interantional transaction over $1k. Probably a good thing, but a pain having to ring AMEX to clear it.

 

[NM]

Remember that with the Charge Card, the entire balance owing at the statement date must be paid in full by the due date. If not paid in full, the penalty charge is very significant - way more than the interest rate of a credit card.

My employer once failed to pay my Corp Amex payment on time and I was hit with a $300 bill for non-payment, and that was on a balance of under $3000. Luckily I was able to show my employer that it was their fault that Amex was not paid and they paid the fee the following month.

I never managed to hit my spending limit on that card (nor my current Diners Club card), and have had balances over $20,000 (two DONE4 airfares plus other travel expenses soon add up). Although it was a corp card, it was still in my name and I was ultimately responsible for payment even though my employer paid Amex directly for the amount I justified via an internal expense claim.

So unless you get benefits from the other aspects of the charge card and are certain to be able to pay off the outstanding balance in full each month, the credit card can be a safer option.