They’re more like regular bank account withdrawals, with a fee. If you need cash quickly, can’t make a withdrawal in person, and don’t have a debit card you can use, Amex’s Express Cash system is a much better alternative to regular credit card cash advances. However, you’ll still be better off withdrawing funds from your bank account in a more traditional way.
But Amex charge cards will handle them differently, either processing them as regular purchases or potentially declining those transactions. Your mileage may vary depending on where you purchase money orders. How Do Charge Cards Impact Your Credit Scores? There are two major scoring differences between charge cards and credit cards, and both relate directly to revolving utilization (also known as credit utilization): Charge cards are no longer considered with respect to credit utilization starting with FICO Score 8 (they aren’t considered by Vantage, Score, either).
So your charge card balances won’t impact your credit scores in quite the same way as everyday credit cards. That’s significant; with regular credit cards, utilization is a crucial scoring factor. With that said, there are lots of similarities between how charge cards and credit cards work. Both can help you build credit (by developing a history of on-time payments), though you can damage your credit just as easily (by missing payments).
You need to be aware of your terms and how much you’re spending, and you should be sure to pay what you need to pay by your due dates. The Issue of Utilization It’s important to know that many modern credit scoring models ignore charge cards when evaluating your credit utilization because utilization is a major factor in your credit scores.
This is why you shouldn’t habitually carry a large credit card balance from month to month if you want to maximize your credit scores, even if your card has a 0% introductory APR period. Now, if a lender uses an older version of the FICO Score, charge cards may still be factored into utilization calculations.
Here’s where the second dissimilarity between charge cards and credit cards comes into play. Charge cards don’t have a published credit limit. So, older versions of FICO scores can’t calculate your debt utilization ratio on a charge card in the same way they do for a credit card. When a charge card issuer reports the balance of the card to the credit bureaus, it must report your historical high balance on the account if no credit limit is available.
Unfortunately, unless you’ve run up an extremely high balance on your charge card in the past, this treatment can lead to credit utilization problems. Let’s assume the highest historical balance on your charge card is $5,000 - Types of Charge Cards. You currently have a $2,500 balance reported to the credit bureaus. Older versions of FICO would consider your charge card to be 50% utilized, even though your unpublished spending limit is likely much higher than $5,000.
Charge accounts are reported as “open” instead of “revolving” like a credit card. As mentioned, more recent versions of FICO scoring models will ignore these accounts when calculating credit utilization ratios. Similarities in Credit Impact Other than how credit limits are reported, . If you keep your accounts open for a long time and pay by your due dates, you’ll increase the average age of your credit lines and accumulate a history of timely payments.
If you make late payments or your payments get returned, these delinquencies will show up on your credit reports whether you’re using a charge card or a credit card. The biggest factor in most major credit scoring models is payment history, so . Our Picks for the Best Charge Cards Most issuers do not offer any charge cards, but on the market today that are similar to the traditional charge card.
We discussed that feature above. They offer perks that are comparable to the best credit cards, and earn rewards points that can be transferred to airline or hotel loyalty programs. Read more about why we picked these cards in The Best Charge Cards and Former Charge Cards. What Is a Charge Card?. Best for Premium Travel Rewards The Platinum Card® from American Express, Our rating, Min.
Earn 10x points on eligible purchases on your new Card at U.S. Gas Stations and U.S. Supermarkets, on up to $15,000 in combined purchases, during your first 6 months of Card Membership. That’s an additional 9 points on top of the 1 point you earn for these purchases. Enjoy Uber VIP status and up to $200 in Uber savings on rides or eats orders in the US annually.
Earn 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel. Starting January 1, 2021, earn 5X points on up to $500,000 on these purchases per calendar year. 5X Membership Rewards® Points on prepaid hotels booked with American Express Travel. Enjoy complimentary access to the Global Lounge Collection, the only credit card airport lounge access program that includes proprietary lounge locations around the world. Business Credit Cards vs. Business Charge Cards:.
Learn More. Get up to $100 in statement credits annually for purchases at Saks Fifth Avenue on your Platinum Card®. That’s up to $50 in statement credits semi-annually. Enrollment required. $550 annual fee. Terms Apply. American Express is a Credit Card Insider advertiser. Best for Foodies American Express® Gold Card, Our rating, Min.
You can now choose between Gold or Rose Gold. Earn 60,000 Membership Rewards® Points after you spend $4,000 on eligible purchases with your new Card within the first 6 months. Earn 4X Membership Rewards® Points at Restaurants, including takeout and delivery, and earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).