Charge Cards

The main difference between a charge card vs. a credit card 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.

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.

Here are the main differences between charge cards vs. credit cards:

• 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.

Charge Card vs. Credit Card:

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 charges of $100 or more, with interest, up to a limit. 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.

2021’s Best Charge Cards vs. Best Credit Cards

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.

The American Express Platinum card credit score requirement is 700 or higher. This means applicants need good credit or better to be approved for the American Express Platinum card in most cases. If you don’t know where you stand, you can check your credit score for free, right here on WalletHub. 

The American Express Platinum card credit score requirement isn’t the only thing that determines whether you’ll be approved, though. Your credit history, income and any debt you’re carrying will also play a role in your approval odds. In fact, reports around the internet suggest you can get approved with slightly lower credit score if you have high enough income.

To gauge your odds of approval, you can also check to see whether you pre-qualify for American Express Platinum card offers. Unlike an actual application, pre-qualification is only based on a soft inquiry on your credit report, and does not affect your credit score. Just keep in mind that while pre-qualification indicates good odds of approval, it does not guarantee it.

If you don’t meet the American Express Platinum card credit score requirement, there are plenty of other credit cards you can get. They likely won’t be from American Express, though, since Amex cards require good or excellent credit. The best credit cards for fair credit also have rewards that fit various spending habits. Once you get a credit card, be sure to make all of your payments on time, and try to keep your credit utilization below 30%. This will help raise your credit score so you can get approved for a card like American Express Platinum card in the future. 

There are no charge cards for bad credit.

Unfortunately, if you have bad credit, your credit card options are limited and at the present time to secured credit cards and unsecured credit cards for bad credit.

The Discover it® Secured Credit Card might be your best option. Great benefits and rewards.

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.

The Amex Green card’s limit can vary from month to month. American Express may adjust the limit based on your card use. The amount and the frequency in which those adjustments occur also depend on a wide range of factors such as your income, credit standing, payment record and more.

You should be able to charge up to the same amount on the Amex Green card each month, as long as there are no drastic changes in your financial situation. A reduced income or lowered credit score may prompt American Express to reduce how much you can spend, for example. Conversely, improvements to your credit and income may allow you to spend more.

The two most important factors to consider when selecting a charge card are the rewards and the annual fee.

In addition to earning points on your spending, some charge cards offer relatively extensive additional benefits such as a 24/7 concierge service, discounted tickets to concerts and sporting events, and airline and hotel perks. However, the more rewards a card provides, the higher its annual fee will likely be.

So before applying for any charge card consider whether you will truly make use of its additional benefits. If you expect to only take advantage of the points earned on purchases, concentrate on finding the charge card with the lowest annual fee.

No Preset Spending Limit (NPSL) means that your card does not have a pre-determined credit line. This does not mean that consumers will be able to spend limitlessly with No Preset Spending Limit credit cards and charge cards though.

An issuer uses various factors including your income, credit score, payment history and spending patterns in order to determine how much money you can spend in a given month. This amount (known as your credit limit) may change from month-to-month and you may not be able to find out what it is.

The way an NPSL card affects your credit score will depend on what information its issuer reports to the credit bureaus. This is because your credit utilization is factored into your credit score. Since NPSL cards lack a specified limit, issuers can either report credit activity in a way that includes them in credit utilization ratios (either as a credit limit or a high balance), or simply exclude information that determines these ratios.

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.

You don’t have to pay off all American Express cards every month. Most Amex credit cards allow you to carry a balance from month to month, requiring only a monthly minimum payment to keep your account in good standing. That’s the case with the Blue Cash Preferred® Card from American Express and Blue Cash Everyday® Card from American Express, for example, as well as the The Amex EveryDay® Credit Card from American Express and others. Some even offer 0% introductory APRs.

On the other hand, you do have to pay some American Express cards in full every month. That includes The Platinum Card® from American Express, American Express® Gold Card and American Express® Green Card. But there are exceptions. If you have one of those cards and use it responsibly, American Express may offer to let you pay for certain purchases over time. Interest will apply to such purchases, though, at a rate that won’t be disclosed until Amex extends an offer.

You can check out WalletHub’s review of the best American Express credit cards to find a good option for carrying a balance. Just don’t expect to find a low regular APR. American Express credit cards are known more for rewards than low rates.

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.