Impact of charge cards on serviceability

Hi guys. Quick question to brokers here. How do the banks view the charge cards in terms of their impact on investor serviceability?

E.g. Amex ones:
What is a Charge Card? | AMEX Australia

I've never had one before but I do have credit cards which as we know do affect the serviceability. I always payoff my credit card debt in full by the statement due date. I've recently come across charge cards and was wondering if banks view them differently since there is no credit limit and they must be paid off every month.

 

Also, do charge cards impact credit score?

 

What is a charge card?

Is it a credit facility?

 

Not sure how it works internally @Terry_w. There does not seem to be pre-allocated credit limit.

 

i don't know what they are for sure but it seems like they are a credit facility that has to be paid in full each month - unlike a credit card which you could pay a small amount owing.

As such I think they would be treated as a credit facility and a credit card.

 

Most lenders treat them the same as a credit card. They will use a theiretical limit, $5k or $10k usually.

 

Same as a credit card in terms of impact on serviceability.

The actual limit used by a bank for a charge card varies.

E.g. with CBA its viewed as a 10k credit card limit. This should knock of about ~40k+ from serviceability for your next loan.

 

Thanks guys. Helpful as always!

 

How can it impact the same as a credit card? There is no interest rate and also no fixed limit so what would the impact on serviceability be and how is it calculated?

No ongoing debt, no interest rate

 

It is a form of credit that you have to pay it back!

I have never had a client with one before so haven't test it out, you might be able to argue the case on appliction - it is like paying cash for something really.

 

Agreed, it is something that if used you have to payback but at most it should be looked at as having potebtial impact on someone's balance sheet and not serviceability. Ultimately it has to be paid back in full in a lump sum at the end of every month. there is no ongoing hit like with credit cards where you would be completely within terms of the credut arrangement if you paid minimum amount on a 50k CC +20% interest, or more than 1k per month.

 

Fwiw I've fully declared charge cards in past application and not had a significant impact like with a CC