December 16th, 2009
American Express Zync Review
American Express introduced the Zync charge card to the 20-something crowd as the latest option in the ever-growing arsenal of plastic for young consumers. This hip addition to American Express’ charge card family, which includes the Green, Gold, and Platinum Card, offers younger consumers a low $25 annual fee, a unique and customizable reward program, and the practicality of the card as a “financially responsible” way to spend.
What makes a charge card different from a credit card is that cardholders must pay off balances in full every month. This enables the cardholder to avoid interest charges and also limits ongoing overspending by restricting cardholders from carrying a balance month-to-month or growing a balance month over month. The Zync comes with the basic American Express Membership Rewards Points Program which earns cardholders one point for every dollar spent. To maximize rewards users are offered four different lifestyle packs, each costing an incremental $20 annual fee, that enable cardholders to double points for spending in certain categories. The Go pack offers double points when you spend on airfare and travel offers, the Social pack for restaurants or special events, the Connect for mobile and cable services, and the Eco Pack, the only charge-free pack, for eco-friendly retailers.
On average, cardholders between 18 and 25 carry a credit card balance of $2,566 monthly in debt (to be linked to Nov Credit Climate). Zync can function as credit training wheels with rewards, which many young consumers need to establish responsible spending habits while foregoing monthly interest charges. One of the primary incentives for young consumers considering the Zync charge card is that the terms of the card promote using credit regularly, establishing an on-time payment history, and managing credit utilization, all of which builds a solid foundation for a healthy credit score and credit report.
Servicing the younger consumer can often present a double-edged sword. While they want to have good credit and spend responsibly, the reality is many young consumers often spend what they don’t have. From textbooks to big-screen TVs, young shoppers can be spontaneous at times and for this, the young consumer may need a credit card. Comparing American Express charge cards and credit cards, there is little difference in annual fees and rewards, and assuming a consumer can get approved for a credit card, the American Express Zync may be a difficult sell.
For American Express Zync, the question remains is responsible spending in favor over free spending? Will the credit-conscious functionality of a charge card appeal to young consumers over the freedom of spend and pay when you can of a credit card?
At Credit Karma Blog, what goes around comes around… So what do you think about this post? Agree, disagree, or have something more to say? We’d love to hear your reactions!
