American Express [the green card]??

Question

Hi, im 17 years old and they sent me an American Express card in the mail about a month ago and last night i decided to apply for it and i hear lots of bad things about credit cards and charge cards etc. i have two jobs and i live with my dad but i dont know the benefits and disadvantages of having this card .. all i know is that whatever i spend i have to pay back at the end of the month is that true with this card? and what else is there that i have to do and are credit cards (visa, mastercard) better than american express? if so should i cancel this right away? and move towards one of those cards?

Answer 1

I don't know too much about American Express Cards, but I do believe the Green One you have to pay off each month.  Cancelling it may have a negative mark on your credit...if you want to start building good credit, you can charge a few small items, such as lunch or a tank of gas, and pay it off each month.

When you are used to having a card, I'd try to get one like Visa where you can carry the balance over if you need to (just to have it for emergencies, like unexpected car repairs or medical bills.)  Just remember the advice my mom gave me...the only things worth paying off are dental bills, doctor bills, and car repairs.

I happen to think American Express cards are a good learning tool for teenagers, because you can't carry the balance and have to actually pay it off, so you learn up front cards aren't free money.

Answer 2

I've had an Amex card.  Not my first choice for a credit card as the places you are likely to shop at may not take it.  (The fees to the merchant are higher for an Amex card than, say, Visa.)

That said, having any credit card encourages you to spend money.  Studies show that people routinely spend larger amounts when they use a credit card than when they pay with cash.  This is not entirely due to the fact that if their wallet was empty they couldn't have made the purchase.

So, if you are keeping the card, leave it at home most of the time....