January 18, 2010
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Charge or Credit; The Best Solution, Pt.1
The mystical evolution of a charge card.As the New Year ignites, many of you have pledged to reduce credit card spending and debt; however, it is often difficult to know how to accomplish it. Experts all seem to differ. One controversy exists over the use of a charge card or credit card. However, before you can begin to think about which is best for you, you'll need to understand the differences between them. Western Union was the first company to offer a charge card back in 1914 and was produced in the paper form. Credit cards were actually a spin off from the first charge card, The Diner's Club Card. The Diner's Club card was developed in 1957 by a small group of business men to meet their dining needs while traveling on business. Two years later, American Express (AmEx) developed the first embossed plastic charge card.
Charge cards extend credit for 30 days and require the balance be paid in full by the billing due date or be subject to severe late penalties. Today's Diner's Club members have 60 days to pay the balance in full. Although AmEx issues predominantly charge cards, the company does offer a select number of customers the option to pay debt over a period of time similar to a credit card. The Extended Payment Options (EXPO) is offered by AmEx whereby customers are able to enroll in the program to spread out payment of purchases over $200 for several months. The company also offers extended payment on certain eligible expenses like travel. American Express is unique in that unlike its major credit card network competitors, the company also extends credit.
Although most charge cards today are offered and managed by local merchants, AmEx is the only major credit card company that also issues charge cards in the United States (U.S.). There are, however, Visa and MasterCard charge cards available in Europe as well as the Eurocard; the main competitor for American Express. Charge cards do not typically tout interest rates or credit limits.