4 ms·

How is that an innovation? You're describing Charge Cards

by joefife 8y ago

ocdtrekkie 8y ago
I've... actually never heard of these. Why isn't this more popular?
- tedivm 8y ago
  Once debit cards came out charge cards lost a lot of their appeal. Charge cards also tend to have a higher yearly fee (an Amex Platinum is $550 a year) because they aren't making money off of interest (although it should be noted they are making money off of the merchants who accept them).
- ryanhuff 8y ago
  Marketing? I suspect that charge cards are more likely to charge an annual fee, since there's not interest income from carrying a balance.
- bunderbunder 8y ago
  Not allowing you to carry a balance makes the card less flexible, since it takes away the ability to use the card to finance items you can't afford to pay in full right now. At least in the US, charge cards also (historically) charged higher fees to retailers, so a lot of stores wouldn't accept them.
  - throw0101a 8y ago
    > [...] ability to use the card to finance items you can't afford to pay in full right now. Given the rates charged by many cards, I'm not sure you'd want to do that. The US has an average of 15%: * https://www.creditkarma.com/credit-cards/i/average-apr-on-credit-card/ https://www.creditkarma.com/credit-cards/i/average-apr-on-cr... * https://www.valuepenguin.com/average-credit-card-interest-rates https://www.valuepenguin.com/average-credit-card-interest-ra...
    - vxNsr 8y ago
      So much this. I've never carried a balance on a card that charges interest. but I would be more open to the idea if they charged interest more inline with market loan rates. 15-35% is insane.
      - bunderbunder 8y ago
        35% seems pretty high, but I think you'd find that, far from being insane, the bottom portion of that range is right in line with what's typical for unsecured debt. You can't really compare it to mortgages or car loans, because those are both secured by a collateral. You can't really compare it to student loans because it's impossible to get out from under a student loan. Either way, the debt is less risky for the lender, so they're willing to offer it for a lower rate.
    - bunderbunder 8y ago
      I've done it before. Never for truly big ticket items, but sometimes the $5 or whatever in interest to carry a small balance for a month isn't worth the extra effort it would take to free up the cash I'd need to pay it off in full without dipping below the minimum balance I like to keep in my checking account, and it's also not worth $5 to me to wait another month before replacing that busted transmission.
      - throw0101a 8y ago
        > I've done it before. It depends on the matter of scale. Some folks either don't understand how things work, or are just bad at math. That's where the problems start for people.
- awad 8y ago
  American Express offers both credit cards and charge cards. The "black card" might be the most well known of all cards and its only real limit is AMEX's judgement of your ability to repay the charges.
  - tedivm 8y ago
    The same applies to the Platinum Card- it defaults to being a charge card but they offer people a built in credit card as well. The interest rate on it is insane though, so even though I have it as an option I've literally never used it as a credit card.
tedivm 8y ago
Charge cards are not what's being described here. If you have an Amex "charge card" (not one of their credit cards) you do have to pay late fees if you miss a payment. Charge cards generally force you to pay them off each month (again, an Amex charge card expects you to clear out the balance for each cycle). This is a credit card, which means you can carry a balance.

How is that an innovation? You're describing Charge Cards

ocdtrekkie 8y ago

I've... actually never heard of these. Why isn't this more popular?

tedivm 8y ago
Once debit cards came out charge cards lost a lot of their appeal. Charge cards also tend to have a higher yearly fee (an Amex Platinum is $550 a year) because they aren't making money off of interest (although it should be noted they are making money off of the merchants who accept them).
ryanhuff 8y ago
Marketing? I suspect that charge cards are more likely to charge an annual fee, since there's not interest income from carrying a balance.
bunderbunder 8y ago
Not allowing you to carry a balance makes the card less flexible, since it takes away the ability to use the card to finance items you can't afford to pay in full right now. At least in the US, charge cards also (historically) charged higher fees to retailers, so a lot of stores wouldn't accept them.
- throw0101a 8y ago
  > [...] ability to use the card to finance items you can't afford to pay in full right now. Given the rates charged by many cards, I'm not sure you'd want to do that. The US has an average of 15%: * https://www.creditkarma.com/credit-cards/i/average-apr-on-credit-card/ https://www.creditkarma.com/credit-cards/i/average-apr-on-cr... * https://www.valuepenguin.com/average-credit-card-interest-rates https://www.valuepenguin.com/average-credit-card-interest-ra...
  - vxNsr 8y ago
    So much this. I've never carried a balance on a card that charges interest. but I would be more open to the idea if they charged interest more inline with market loan rates. 15-35% is insane.
    - bunderbunder 8y ago
      35% seems pretty high, but I think you'd find that, far from being insane, the bottom portion of that range is right in line with what's typical for unsecured debt. You can't really compare it to mortgages or car loans, because those are both secured by a collateral. You can't really compare it to student loans because it's impossible to get out from under a student loan. Either way, the debt is less risky for the lender, so they're willing to offer it for a lower rate.
  - bunderbunder 8y ago
    I've done it before. Never for truly big ticket items, but sometimes the $5 or whatever in interest to carry a small balance for a month isn't worth the extra effort it would take to free up the cash I'd need to pay it off in full without dipping below the minimum balance I like to keep in my checking account, and it's also not worth $5 to me to wait another month before replacing that busted transmission.
    - throw0101a 8y ago
      > I've done it before. It depends on the matter of scale. Some folks either don't understand how things work, or are just bad at math. That's where the problems start for people.
awad 8y ago
American Express offers both credit cards and charge cards. The "black card" might be the most well known of all cards and its only real limit is AMEX's judgement of your ability to repay the charges.
- tedivm 8y ago
  The same applies to the Platinum Card- it defaults to being a charge card but they offer people a built in credit card as well. The interest rate on it is insane though, so even though I have it as an option I've literally never used it as a credit card.

tedivm 8y ago

Charge cards are not what's being described here. If you have an Amex "charge card" (not one of their credit cards) you do have to pay late fees if you miss a payment. Charge cards generally force you to pay them off each month (again, an Amex charge card expects you to clear out the balance for each cycle). This is a credit card, which means you can carry a balance.