Are Charge Cards Really Any Different From Credit Cards?

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

1. 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.
2. No interest. Since you never carry a balance on a charge card, you won’t pay interest, either.
3. 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.
4. 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

1. 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.
2. 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.
3. 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.
4. 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.
5. Other fees. Charge cards might have other fees that are common for credit cards, such as foreign transaction fees or returned check fees.
6. 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
• Gold Card from American Express
• Platinum Card from American Express
• Premier Rewards Gold 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 2018!

Lender	Rates (APR)	Loan Amount
1 Includes AutoPay discount. Important Disclosures for SoFi. SoFi Disclosures Personal Loans: Fixed rates from 6.58% APR to 14.87% APR (with AutoPay). Variable rates from 6.275% APR to 12.575% APR (with AutoPay). SoFi rate ranges are current as of July 16, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.275% APR assumes current 1-month LIBOR rate of 2.10% plus 4.175% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org) 2 Important Disclosures for Citizens Bank. Citizens Bank Disclosures Personal Loan Rate Disclosure: Fixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount. * Important Disclosures for Upgrade Bank. Upgrade Bank Disclosures Personal Loan Rate Disclosure: Fixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
	7.73% – 29.99%	$1,000 - $50,000	Visit Upstart Check rate nowon SLH's secure site
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