The Difference Between a Charge Card and a Credit Card

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Learn the difference between a charge card and credit card.
Yes, there is a difference between a charge card and a credit card. If you’re more of a visual person:

Charge card = Credit card  ;  Credit card ≠ Charge card

A charge card is, in fact, a type of credit card, but one that requires you to pay off your balance in full every month (or billing cycle). With a charge card, you can’t make payments over several months as you would with a credit card. So the main difference is that with a credit card, you have the option of a revolving balance that is payed over time, and with a charge card, you don’t. Got it? Good. Because there are other differences, too. Let’s look at them.

Approval Rate

Charge cards can be more difficult to come by than credit cards. You’ll need to have excellent credit to get your hands on one, while it’s a bit easier to be approved for a credit card, since there are so many out there catering to a variety of credit worthiness.

Credit Limit

While most credit cards will give you a limit of what you can spend and then charge you a penalty for exceeding that limit (such as higher interest rates and/or over the limit fees), some charge cards won’t limit you. That means you can charge to your heart’s content, as long as you’re prepared to pay it off at the end of the billing cycle.

Interest & Late Payment Fees

Since you aren’t allowed to carry a balance on a charge card, you won’t pay interest like you would on a credit card balance. However, you will be charged interest if you pay late (past the grace period). Credit cards also have late payment fees, but you only have to make a minimum payment on a credit card, as opposed to a full payment with a charge card. Additionally, credit cards have an interest rate, which is hugely important, as the percentage directly determines how much you will pay each month your balance isn’t payed in full. Of course, paying interest on a credit card can be avoided by not keeping a revolving balance/paying it off.

Annual Fees

Charge cards typically have annual fees attached to them, though this fee will often be waived the first year. Many credit cards also have fees, but it is easy to find one that doesn’t if that is something you’re wanting to avoid.

Purchase Limitations

Unlike credit cards, you typically can’t transfer balances or make cash advances with a charge card.


Both charge cards and credit cards come in a variety of shapes and sizes (ok, not really, but you get what we’re saying). Some of both kinds of cards will offer benefits that make the annual fee worth paying. These perks vary from card to card, but it’s important to compare them when deciding on either a charge card or credit card.





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