Merry Christmas Eve to all my Christian readers, I’ve got a gift for you a day early. What if you could take your credit card now, make it so you can’t run a balance, and add an annual fee? Sound like something you might be interested in? Me neither. However, that’s exactly how a charge card compares to a traditional credit card.
I fail to see how making credit cards more expensive (in terms of the annual fee!) is making them more attractive. In fact, the market agrees. Only 2% of credit card offers in 2007 were of the charge card variety, as opposed to 8% in this year. Because of the changes in credit card lending rules (Credit CARD Act, 2009), you can most likely expect to see many changes in your current credit lines which bring them in line with charge cards. For starters, you can probably expect more of your credit cards to tack on an annual fee.
The advantage to charge cards, of course, is strictly an emotional and behavioral one. Because you aren’t able to float a balance, you should theoretically not spend more than you’ll be able to pay at the end of each month. Charge cards do away with the credit limit for this reason – you can charge as much as you can pay. You won’t be able to carry a balance, and will be hit with either a fee or a percentage of the balance you do run (if you attempt it).
If this seems like the sort of thing you still might be interested, American Express offers the vast majority of charge cards. It’s a good place to start for information. Of course, many of you probably see the scaling back of features of your current cards. You aren’t alone; on paper it’s a pretty weak program. However, if you can use your irrationality to your advantage, go for it!