dcsimg

Ask the expert

Add captcha
Close
Enter the text shown above:

Will an American Express charge card help me get a credit rating? Or is it more worthwhile to get a credit card?

By , CardRatings contributor
  • Google +
  • Twitter
  • Facebook

Great question. In general, as long as you're making on-time payments, either type of card can benefit your credit score. But there are some important distinctions between credit cards and charge cards, beyond the fact that you generally can't carry a balance on a charge card.

One difference between a credit card and a charge card is that a charge card doesn't generally have a stated limit and therefore it might appear to report as maxed out. Of course the credit bureaus are aware of this and I believe they try to address it, but you know how that goes (i.e. I don't expect they completely correct for it). How it will affect your credit depends a lot on other factors in your credit file - especially how many other cards you have and the utilization on them.

I like charge cards for some who are working on forming good habits around credit cards since you have to pay a charge card in full each month. However, all charge cards have an annual fee. So, I would say, if you don't have a specific reason that makes the card worth the fee (like consistently paying in full, really taking advantage of the rewards and other perks, etc.), then you should probably just go for a credit card - especially if you're just looking for a card to help you improve your already decent credit score.

If you don't pay off a charge card balance, then you can expect a late fee (usually $35), and if you blow it two months in a row, it'll be another $35 or about 3 percent of the balance, whichever is higher. And then, of course, your credit score will take a hit. There's a reason American Express cards are intended for people with good to excellent credit. If you have poor credit or no credit, they may not be a realistic choice at this time. But if you have good credit already, an American Express card can make it better.

 

 

0 Responses to "Will an American Express charge card help me get a credit rating? Or is it more worthwhile to get a credit card?"

No Comments

Leave a Comment
 
 
 
About Our Ratings ×

Our editors rate credit cards objectively based on the features the credit card offers consumers, the fees and interest rates, and how a credit card compares with other cards in its category. Ratings vary by category, and the same card may receive a certain number of stars in one category and a higher or lower number in another.

The ratings are the expert opinion of our editors, and not influenced by any remuneration this site may receive from card issuers.

Advertisers in our database are highlighted, and advertisements include an option to apply using links on our site. CardRatings.com may be compensated by companies mentioned on the site when a user's application is accepted or approved by such companies.

How do your cards stack up?

Compare your card starting here

NEXT »

Featured Partner Cards

loading