A charge card is a credit card that requires the balance to be paid in full every month.
Many people use charge cards because they force more disciplined spending than credit cards. Because charge cards require payment in full each month, consumers cannot adopt an "I'll pay for it later" type of approach and continue to amass more and more debt. If they do not pay their balances in full by a specific time (usually within 25 days of the bills arrival) they cannot make any more purchases.
Additionally, many people enjoy the rewards and exclusivity garnered from charge cards. Users often earn points on their purchases and receive other perks like concierge service and discounted tickets to concerts and sporting events.
The main difference between a credit card and a charge card is that charge cards don’t allow you to carry a balance from one month to the next, 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.
Credit Cards vs Charge Cards: Main Differences
Amount Due: Charge cards require you to pay your bill in full each billing cycle, while credit cards only require a minimum payment (a portion of your entire balance) and revolve the rest of your balance to the next billing cycle. Unless the credit card offers an introductory 0% APR though, you’ll have to pay interest on the unpaid portion of the balance.
Credit/Spending Limit: Charge cards generally don’t have preset spending limits, while credit cards will assign a credit limit based on your creditworthiness.
Debt, Interest and Fees: Charge cards will not allow you to accrue debt as you’re required to pay off your balance every month. Not paying your balance in full by the due date will attract considerable late fees though. Credit cards will only attract late fees if the minimum payment is not made by the due date. However, credit cards will accrue interest on any unpaid balance, unless they offer an introductory 0% APR for a certain period of time.
Credit Score Impact: Credit utilization isn’t part of the scoring criteria for charge cards, as they have no preset spending limit. Credit utilization for credit cards, on the other hand, is recommended to be kept no higher than 30-40%.
Annual Fees: Charge cards tend to charge high annual fees, while credit cards make for a more diverse offering, covering the whole spectrum of credit, from bad and limited, to excellent credit.
Some hybrid cards do have some sort of short-term financing. For example, American Express has a feature called "Pay Over Time" on some of their cards. That lets you carry a balance between months on certain eligible charges, with interest, up to a limit. Not all cardholders are eligible and all charges that are not included in the Pay Over Time balance must be paid in full by the due date.
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.
No, there aren’t any charge cards on the Visa network at the moment. All charge cards in the U.S. are either on the American Express or the Mastercard network right now.
A charge card is a special type of credit card where you must pay the balance in full each month. All the cards on the Visa network are regular credit cards that require only a minimum monthly payment. You can carry the remaining balance to the following month, but in most cases, you’ll pay interest on the unpaid balance. You do have the option of paying a credit card’s entire balance each month to avoid interest charges.… read full answer
Alternative Credit Card Option
You should not rule out credit cards based on their network, and you should instead focus on finding a card that suits your financial needs.
For instance, if you’re looking for a charge card and you’re also a small business owner, you should consider getting the Capital One Spark Cash Plus. This card offers 2 - 5% cash back on purchases, plus a $500 for spending $5,000 in the first 3 months and $500 for spending $50,000 in the first 6 months. The card’s annual fee is $150.
There aren’t any retailers that offer store charge cards. Many people refer to store cards as charge cards. It’s common to hear reference to a Walmart charge card, a Kohl's charge card or a Target charge card as a result. But store cards are credit cards on which you can carry a balance from month to month, not charge cards whose balance must be paid in full each month. A good rule of thumb to remember is that if it has an interest rate, it's not a charge card.… read full answer
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