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What is a charge card?

Everything you need to know about charge cards and how they compare to credit cards.

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Charge cards work in a similar way to credit cards, with the bank paying for the purchases you make and then billing you at the end of the statement cycle. However, there are also some key differences between charge cards and credit cards, including your payment requirements and the eligibility criteria. In New Zealand, we only have one charge card on offer – the American Express Platinum Card.

What is a charge card?

Charge cards have no set spending limit and require that you pay your full balance off by the statement due date, which is usually at the end of the month. A charge card is not a revolving line of credit and doesn’t charge interest like traditional credit cards. Instead, you are charged a late fee if you don’t pay on time. The structure and payment requirements of charge cards also mean that they tend to have higher minimum income and credit history requirements than some credit cards. Charge cards often come with rewards, travel insurance, airport lounge access, concierge services, and purchase and fraud protection.

Charge cards vs credit cards

FeatureCharge cardsCredit cards
Card balanceCard balance must be paid in full each month.Card balance can be carried indefinitely as long as you make a 2-3% monthly minimum repayment.
Interest rateNo interest rate but a late fee penalty applies if you do not pay the balance in full.Interest fees apply for purchases and cash advances.
Credit limitUnspecified credit limit.Fixed credit limit.
Card feesAnnual fees for card usage and penalty fees when a payment is late. Cash advance, ATM and international transaction fees may also apply.Annual fees are sometimes waived, but other fees such as ATM, cash advance and international transaction charges may apply.
Eligibility requirementStrict income and high credit rating requirements.Varying income and credit rating requirements.
Credit/loan facilityCharge cards are suitable for spending in the short-term but are not loan facilities.Credit cards support loan consolidation and allow you to spread repayments over an extended period.

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