There are benefits to using both charge cards and debit cards. Charge cards allow you to build credit history and do not require immediate payment for purchases, which provides both flexibility and added protection from fraud. You must simply pay your balance in full at the end of each month in order to retain purchasing privileges and avoid late fees.
Additionally, charge card accounts provide far more lucrative perks and rewards than do debit cards. The only benefit that a debit card has over a charge card is that it makes it impossible to spend more than you can afford. Therefore, you should only use a debit card if you seek this type of inherent discipline.
When you look at a charge card vs. a credit card, the most important difference is that charge cards don’t allow you to carry a balance between months, while credit cards do. Both types of cards allow you to buy now and pay later, but charge cards require that payment to be for the full amount you owe at the end of the billing cycle. Traditional credit cards require you to pay just a portion of your balance by the due date each month to keep your account in good standing.… read full answer
It’s important to note that a charge card actually is a type of credit card – just a unique one. Charge cards and other credit cards are different in more ways, too. For example, charge cards are more likely to have no preset spending limit. That doesn’t mean you have no limit, just that you won’t know your limit.
It’s good to be aware of all the major similarities and differences between charge cards and credit cards so you can make an informed decision about which to get.
One more major difference between charge cards and other credit cards is the consequence of not paying your monthly bill in full. With a credit card, if you don’t pay in full but make the minimum payment, you’ll just owe interest on the remaining balance. But if you don’t pay a charge card in full, you’ll get hit with late fees. Eventually, you might be restricted from making new purchases until you pay past-due amounts, too.
Some charge cards do have short-term financing. For example, American Express has a feature called “Pay over Time” on some of their charge cards. That lets you carry a balance between months on certain charges of $100 or more, with interest, up to the Pay Over Time Limit. You must also call Amex and have them approve the charge as “pay over time” after you make it. There is no overall time limit to pay your charges back, but you will have a monthly minimum payment. Not all cardholders are eligible.
Now that you’re familiar with the fundamental differences between charge cards and credit cards, you can take a look at some of the best that both types have to offer.
Overall, credit cards tend to be better than their charge card counterparts for most people. Credit cards provide financing capabilities, for one thing, and some of them are much easier to obtain. Charge cards can be very attractive to a certain segment of the market, though – people with good or better credit who always pay in full and want premium rewards.
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