Zync targets young adults but may not help them build credit

The new Zync card from American Express is aimed at 20- to 30-year-olds. Zync, a charge card that lets users earn double rewards based on the type of purchases they select, is "customizable like your playlist," says the card's online site. "Create your own version of Zync."

To attract this young group, ads have appeared on Twitter and on blogs. But can the card give them the reward they need most: a solid credit record?

The Zync card is part of the American Express Membership Rewards program, which gives cardholders one point for every dollar they spend. Zync's points never expire and can be used for purchases at the company's Web site. There's no cash-back option, but points can be used for some card purchases or redeemed for American Express gift cards.

The card program includes the company's standard benefits, such as automatic one-year extended warranties on purchases, travel and car-rental insurance, roadside assistance, and purchase protection for lost or damaged goods.

You'll have to pay a $25 annual fee to get the card. You can double some rewards if you're willing to pay $20 more a year for a "pack." The "Go Pack," for example, doubles rewards on air miles and offers discounts on rental cars and travel packages. You'll get double rewards on cell-phone, cable, and Internet charges with a "Connect Pack." A "Social Pack" earns double points on restaurant meals and entertainment, and gives you early access to some event tickets.

Zync is a charge card, not a credit card. You must pay off your balance each month so you won't get hit with high interest costs. But if your payment is late you'll be charged $35 or 2.99 percent of the balance, whichever is higher.

Although charge cards like Zync are good for budgeting, a well-managed credit card can be a better way to build a credit history. "Charge cards are an excellent way to stay out of debt," says John Ulzheimer of Credit.com. "But they lack a preset spending limit, which is invaluable in your credit score calculation."

Because charge cards have no spending limit, some scoring systems use the card's highest balance in their credit utilization calculations instead. That may be lower than a typical credit limit and may result in a higher debt-to-credit ratio (a low ratio benefits your credit score).

And unlike gold and platinum American Express cards, Zync does not allow point transfers to airline or hotel partners.

If you charge a lot each month on items besides travel, consider the American Express Blue Cash card as an alternative. It carries no annual fee and offers the flexibility of cash-back rewards instead of points. But the highest level of rebates doesn't kick in until you reach $6,500 in annual spending. If you charge less, compare USAA American Express, Chase Sapphire, and Citi Forward rewards programs with Zync. Frequent flyers might prefer the Amex Green charge card, which lets you combine points with over 20 airline programs.

This article appeared in Consumer Reports Money Adviser.