This is a guest post by Michael from Credit Card Forum.
In Hank’s popular post “83 Money Moves To Make Before You Are 30” the first thing listed is to stop using credit cards. Despite the fact that I own a site about credit card reviews, I actually agree with him if their temptation will cause you to spend excessively and go into debt. If that’s the case, it would be best for you to avoid them altogether. Plain and simple.
On the other hand, credit cards do offer rewards and benefits that aren’t found on debit cards. So how can you enjoy those perks, without the temptation (or ability) to go into debt? Well, that’s where a charge card will help you out. Charge cards basically work the same way that credit cards do, but the big difference is that you are required to pay your monthly charges in full when the bill arrives.
Some Of The Benefits Of Charge Cards
Rewards: All of the American Express charge cards include a rewards program of some kind. Their entry level charge card, the $25 annual fee Zync, includes “Membership Rewards Express” which is a good program, but the points are slightly less versatile than the regular “Membership Rewards” found on the higher tiers. Just like most credit card rewards, these points can be redeemed for everything from gift cards, to merchandise, and travel. For businesses and sole proprietors, there is also a charge card that gives cash back; the American Express Plum Card. With this card, a 1.5% rebate is given if your bill is paid within 10 days.
Protection For Purchases: Not only do American Express credit card holders get these benefits, but charge card holders, too:
- Extended Warranty: On eligible purchases, coverage provided by the original manufacturer’s warranty will be extended up to one additional year (for warranties of less than one year, the extension will mirror whatever the original duration is).
- Return Protection: For eligible purchases, If a store won’t accept your return within the first 90 days, AmEx will. They will provide up to $300 reimbursement per item, subject to a yearly maximum.
- Purchase Protection: This benefit provides coverage if an eligible purchase is stolen or accidentally damaged during the first 90 days. The amount of coverage per item and per year varies by card.
Travel Benefits: American Express charge cards offer a number of different travel benefits. Depending on the card level, you may get benefits like travel accident insurance, car rental collision coverage, luggage insurance, phone concierge service, and various travel discounts. Their Platinum Card offers the most but considering its $450 annual fee, it won’t make sense for the vast majority of the population since the benefits are geared towards frequent travelers.
If you like credit card rewards and benefits, but don’t like the temptations of using a credit card, then it may be worth looking into a charge card. There are many beneifts of charge cards that may work in your favor.
Michael is the founder of CreditCardForum.com, which is a site for charge card and credit card reviews. Although he advertises all of the aforementioned charge cards on his site, he would like to remind readers that they shouldn’t pay for the high tier cards if they won’t use the benefits.