|by Jason Steele|
A few weeks ago, I attempted to answer the question, What Is A Charge Card? Since then, I have heard from an American Express spokesperson regarding chargecards. They gave me an opportunity to ask them some questions about this and other subjects. While there doesn’t seem to be anything inaccurate in my assessment, I thought it would be nice to learn a bit more about charge cards as opposed to credit cards.
Part 1 is today, Part 2 and my comments are tomorrow.
What is the history of American Express’s Charge cards?
Amex: In 1958, American Express launched the American Express Charge Card – a natural product addition for the company that had already established itself as a leader in offering travel and financial services, including Travelers Cheques and money orders to customers worldwide. The American Express Charge Card was yet another way for the company to provide outstanding customer service to consumers with an affluent lifestyle that included traveling and entertaining.
The Charge Card immediately resonated with its audience. By the end of 1958, the American Express Charge Card was accepted at an estimated 30,000 establishments worldwide and was in the hands of 500,000 customers. There are currently approximately 12,000 charter Cardmembers who have carried the American Express Charge Card for fifty-one years, joining millions of other people who now carry one of the many American Express Cards available.
American Express’ original Charge Card was made of paper, not plastic; was purple in color to be consistent with the design of the American Express Travelers Cheque; and had an annual fee of $6 to position the card as a premium product. In 1959, American Express introduced an embossed plastic card, an industry first, to better withstand day-to-day use and speed processing at the point-of-sale.
Does Amex claim any “firsts” in the industry? Do they hold the largest share of the charge card market in the US?
Amex: As far as we know, American Express is the only one that we know that offer charge cards. American Express has continued to evolve the Charge Card over the past 51 years and has launched innovative Cards, benefits and services to cater to the changing needs of its Cardmembers, including:
• 1963: Introduced American Express Cards in local currency outside North America
• 1965: First to limit Cardmember liability against fraudulent Card use, which is later enacted as a federal consumer protection law
• 1966: Launched Corporate Card program to target corporate customers
• 1969 Colored the Card green, instead of purple, to resemble the color of the US dollar
• 1972: First to introduce the magnetic stripe on payment cards
• 1978: First to launch Emergency Card Replacement
• 1982: Pioneered toll-free, 24-hour customer service
• 1984: Introduced the Platinum Card, the first of its kind, establishing the premium card market
• 1986: First to launch Buyers Assurance, a Card benefit that extends manufacturer warranties
• 1987: Launched American Express’ first revolving credit card and formed the Small Business Partnership, which offered small companies financial management tools, information and resources, the company’s first formal initiative to target the small business market.
• 1991: Introduced Membership Miles, the company’s first loyalty program, that later was expanded and renamed Membership Rewards
• 1995: Launched American Express’ first co-branded card with Hilton
• 2003: Invented clear card technology that is currently used for Blue for American Express, Blue Cash from American Express and several other American Express Cards
• 2005: First to rollout contactless payments on a national basis with ExpressPay on the Blue from American Express Card
Most people understand the distinction between a credit card and a charge card as follows; a credit card holder has the option of paying a balance over time, while a charge card does not. Is that accurate, or is there more?
Amex: Charge Cards are an alternative to cash, debit and credit cards and are a smarter way to pay. You stay out of debt because you have to pay off your balance in full every month, there are no interest charges, and you can build your credit history. Plus you earn great rewards for every dollar you spend. For those consumers who are looking to get in control of their finances and stay out of debt, Charge Card is the smarter option.
For those consumers who would rather pay their balance over time, American Express offers a variety of products because consumers want choice – we don’t have a one-size-fits-all philosophy.
Charge cards are marketed towards people who pay their balance in full every month. Obviously, you can do that with credit cards as well. What are the advantages of a charge card?
Amex: With a credit card, it can be tempting for consumers to spend beyond their means because they just pay off a portion of their bill each month and then find themselves paying interest on their revolving balance.
Cardmembers are encouraged to spend within their means and know to pay their bill in full each month. The Charge Card is the smarter way to pay because it allows Cardmembers to be in control of their spending while also getting real rewards, services and protections.
Stay Tuned For Part 2 Tomorrow