The information related to the American Express offers listed in this article has been collected by Student Loan Hero and has not been reviewed or provided by the issuer of this card prior to publication. Terms apply to American Express credit card offers. See americanexpress.com for more information.
A charge card is similar to a credit card — many people often use the terms interchangeably. However, they aren’t the same.
So what is a charge card? Here’s a look at what makes a charge card different from a credit card, as well as when a charge card could be the right choice for you.
What is a charge card?
A charge card is a plastic card used to make purchases to an account, just like a debit or credit card. Like a credit card, you make purchases on a charge card on credit instead of with cash.
But the central difference between a charge card vs. credit card is what you have to pay each month.
With a credit card, you can carry a balance over into the next month and get away with paying the credit card minimum payment. A charge card must be paid off in full each month.
For example, say you spend $500 in a month. If you paid with a charge card, the payment due for that billing cycle would be the full $500 balance.
But if you charged that much to a credit card, you wouldn’t have to pay the $500, just the credit card minimum. Usually, this is around three percent, so you’d pay a minimum of just $15. You would also be charged interest on the remaining balance.
Charge cards vs. credit cards: 4 major differences
- No set credit limit. While a credit card has a credit limit on the balance you can carry, a charge card won’t.
However, the charge card issuer will usually limit how much you can spend with a charge card. The spending limit is based on their estimates of what you can afford to repay.
- No interest. Since you never carry a balance on a charge card, you won’t pay interest, either.
- Not counted toward credit utilization. With no credit limit, a charge card is not counted toward your credit utilization ratio. This is a measure of how high your balances are in comparison to your credit card limits.
- Not as widely offered. Charge cards are becoming less common, and most major banks and credit issuers no longer offer them to consumers. American Express is the biggest credit card issuer that still offers charge cards.
Charge cards vs. credit cards: 6 similarities
- Annual fee. Both charge cards and credit cards charge annual fees. However, expect charge cards to have higher annual fees, similar to those charged on travel or rewards cards.
- Rewards. Several charge cards offer the chance to earn rewards, just like many common credit cards. American Express offers charge cards that earn cash back, travel, and more.
- Exclusive benefits. Charge cards often give cardholders access to unique perks and benefits. American Express cardholders, for instance, can get credits for airline fees or access to exclusive airline lounges.
- Late fees. Both charge cards and credit cards will levy a fee if you pay late. However, you can make the minimum payment to avoid this fee on a credit card. A charge card will require full payment to avoid a late fee.
- Other fees. Charge cards might have other fees that are common for credit cards, such as foreign transaction fees or returned check fees.
- Build credit. Issuers report account behavior and payment history of credit cards and charge cards to credit bureaus. A charge card can help build credit, just like a credit card — when you pay in full and on time each month.
In fact, having a charge card could even give you an edge by improving your credit mix.
When to choose a charge card
A charge card can be a smart spending tool for certain kinds of consumers. It can help keep spending under control and be a useful credit-building tool.
If you want to keep your spending disciplined
First, a charge card is a good option if you are worried about getting into credit card debt. Because your bill is due in full each month, a charge card won’t allow you to get into debt.
It places a natural limit on what you can spend with what you can afford to pay off each month. This can keep you in the mindset to purchase less and keep your balance affordable. Therefore, a charge card can help you improve your financial discipline.
However, if you do find yourself facing a charge card balance you can’t afford, don’t panic. Many charge cards have a contingency program to allow you to turn the amount due into credit you can pay in installments. For American Express customers, for example, there’s the Pay Over Time feature.
If you’re looking to build credit
Another good reason to consider a charge card is to build credit.
As stated above, a charge card can improve your credit mix — which could give your score a boost. However, it usually has a pretty limited effect.
Plus, charge card purchases don’t affect your credit utilization. So you can spend more freely, as higher charge card balances won’t drag down your credit score the same way as high credit card balances.
Where to get a charge card
If you’re interested in a charge card, take some time to comparison shop and understand each card’s terms. While there are not many card issuers that offer charge cards, some still do.
The main charge card issuer is American Express. It currently offers four charge cards:
- American Express® Green Card
- American Express® Gold Card
- The Platinum Card® from American Express
Diner’s Club Charge Card is another common charge card not in the American Express family that’s widely offered.
Retailers charge cards used to be common but are now becoming rarer. Kohl’s –a retail department store – still has one, with its My Kohl’s Charge card.
If you’re an entrepreneur, you might also be able to get charge cards for small businesses.
Charge cards are not as common as they used to be, but many cardholders still prefer them. Therefore, understand how your charge card works and only spend as much as you can pay in full each month.
With responsible spending, a charge card can be a rewarding tool to make purchases, build credit, and avoid credit card debt.
Interested in a personal loan?Here are the top personal loan lenders of 2020!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Opploans.
Direct Deposit required for payroll.
Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.
3 Includes AutoPay discount. Important Disclosures for Payoff.
4 Important Disclosures for FreedomPlus.
5 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
6 Important Disclosures for LendingPoint.
7 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105.
†Per reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at reviews.lendingclub.com
**Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between January 1, 2018 to July 20,2018. The time it will take to fund your loan may vary.
8 Important Disclosures for Earnest.
9 Important Disclosures for Avant.
*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.
**Example: A $5,900 loan with an administration fee of 4.75% and an amount financed of $5,619.75, repayable in 36 monthly installments, with an APR of 29.95% would have monthly payments of $250.30.
Based on the responses from 11,574 customers in a survey of 210,584 newly funded customers, conducted from 1 Feb 2018 – 1 Aug 2019 95.05% of customers stated that they were either extremely satisfied or satisfied with Avant. 4/5 Customers would recommend us. Avant branded credit products are issued by WebBank, member FDIC.
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
* Personal loans made through Upgrade feature APRs of 6.98%-35.89%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by WebBank, Member FDIC.
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|5.99% – 18.82%1||$5,000 - $100,000|
|6.53% – 35.99%||$1,000 - $50,000|
|6.98% – 35.89%*||$1,000 - $50,000|
|99.00% – 199.00%2||$500 - $4,000|
|5.99% – 24.99%3||$5,000 - $35,000|
|5.99% – 29.99%4||$7,500 - $40,000|
|6.79% – 20.89%5||$5,000 - $50,000|
|9.99% – 35.99%6||$2,000 - $25,000|
|6.95% – 35.89%7||$1,000 - $40,000|
|5.99% – 17.24%8||$5,000 - $75,000|
|9.95% – 35.99%9||$2,000 - $35,000|