What Is a Charge Card? Pros, Cons, and Alternatives

A charge card is one of the many forms of plastic you can carry in your wallet (or the virtual plastic you can keep in your digital wallet app). It looks, feels, smells and tastes a lot like a credit card, but there are some key differences between the two.

Here’s everything you need to know about charge cards, how they work, how they’re different from credit cards and why you’d want one (or not).

What Is a Charge Card?

A charge card is a payment method that resembles a credit card but has no preset spending limit and must be paid in full each month. A charge card doesn’t come with a minimum payment option like a credit card, and will charge late fees if you don’t pay off a monthly balance, rather than letting your balance accrue interest.

Charge cards are quite rare for individuals (you’re more likely to see credit cards), but you might see this credit option for cards offered by gas stations or retail store chains (though many store cards are regular credit cards now, too).

Most remaining charge cards are designed for businesses or high-earning individuals.

The terms “charge card” and “credit card” are often used interchangeably, but they’re not the same type of account. The key differences are in how you repay the creditor for your charges.

Charge Card vs. Credit Card

Features Charge Card Credit Card
Transactions Swipe or enter number to make a purchase on credit Swipe or enter number to make a purchase on credit
Spending limit Yes No
Minimum payment Yes; 1% to 2% of statement balance + int. and fees n/a
Interest 16% to 36% on average Not typical; 18% to 26% if applicable
credit reporting Payments, balance, credit utilization Payments, balance

Transactions

A transaction with either usually looks the same: You swipe a card or enter the card number, and the creditor covers the purchase. You accrue a…



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