The simple difference between charge cards and credit cards | June 2018
charge card image

What are charge cards?

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Charge cards are similar to standard credit cards with one major exception.

Many people hearing the term charge card will say, “Charge what?”

It’s hard to blame them: You don’t see charge cards much anymore. Today, the only major provider still offering them is American Express. Other issuers stick to credit cards.

But charge cards haven’t died off yet. In fact, there are still a few excellent ones — like the well-rounded Premier Rewards Gold Card and the travel powerhouse Platinum Card.

Here’s how charge cards differ from your typical credit card.

What is a charge card?

What’s the biggest difference between a credit card and a charge card? You can carry a balance month to month on a credit card. With a charge card, you have to pay your balance in full each month.

An easy way to tell if you’re looking at a charge card is by checking a card’s terms and conditions. For instance, here’s the pricing information for the Chase Sapphire Preferred credit card:

how a credit card differs from a charge card
See the interest rates for “Purchase Annual Percentage Rate,” “Balance Transfer APR” and “Cash Advance APR”? You’ll also find information about an interest grace period and the minimum interest charge. This is a clear indication that you’re looking at a credit card.

Now look at the pricing information for American Express’s Premier Rewards Gold Card:

charge card 2
There’s no information about interest payments anywhere. Here, you’re looking at a charge card.

Did you know?

Charge cards trace their roots back to the late 1800s, when companies issued metallic “charge plates” and “charge coins.” These were used to imprint customer information onto sales slips.

Can I apply for a charge card?

Card providers typically require good to excellent credit of 680 or higher for charge cards. Because you pay your balance in full each month, your issuer wants to know that you’re likely to repay your debt.

Compare charge cards

Rates last updated June 19th, 2018
Name Product Product Description Intro APR for Balance Transfer APR for Purchases ( Purchase Rate ) Annual fee Minimum Credit Score
Amex EveryDay® Credit Card
Earn 15000 Membership Rewards® Points after you use your new Card to make $1,000 in purchases in your first 3 months.
0% Intro APR for 15 months
14.74% to 25.74% variable
$0
Fair (660-699)
Blue Cash Everyday® Card from American Express
Earn $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive the $150 back in the form of a statement credit.
0% Intro APR for 15 months (with whichever is greater, $5 or 3% balance transfer fee)
14.74% to 25.74% variable
$0
Fair (660-699)
Amex EveryDay® Preferred Credit Card
Earn 15000 Membership Rewards Points after you use your new Card to make $1,000 in purchases in your first 3 months.
0% Intro APR for 12 months (with whichever is greater, $5 or 3% balance transfer fee)
14.74% to 24.74% variable
$95
Fair (660-699)
Blue Cash Preferred® Card
Earn $250 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive the $250 back in the form of a statement credit.
0% Intro APR for 12 months (with whichever is greater, $5 or 3% balance transfer fee)
14.74% to 25.74% variable
$95
Fair (660-699)
The Platinum Card® from American Express
Get 5X Membership Rewards® points on flights booked directly with airlines or with American Express Travel and 5X points on eligible hotels booked on amextravel.com.
No interest charges because you pay your balance in full each month
$550
Fair (660-699)
Blue from American Express® Card
Earn rewards with no annual fee.
16.99%, 19.99% or 21.99% variable
$0
Good (700-739)
Premier Rewards Gold Card from American Express
Earn 50,000 Membership Rewards® Points after you spend $2,000 on purchases on your new Card in your first 3 months.
0
$0 annual fee for the first year ($195 thereafter)
Fair (660-699)
Blue Sky® Credit Card
Flexible travel rewards and no annual fee.
19.99% variable
$0
Good (700-739)
Hilton Honors™ Card from American Express
Earn 75000 Hilton Honors Bonus Points after spending $1,000 or more in purchases on the Card within your first 3 months of Card Membership.
17.24% to 26.24% variable
$0
Fair (660-699)
Gold Delta SkyMiles® Credit Card
Earn 35000 bonus miles after you make $1,000 in purchases on your new card within your first 3 months and a $50 statement credit after you make a Delta purchase with your new Card within your first 3 months.
17.49% to 26.49% variable
$0 annual fee for the first year ($95 thereafter)
Fair (660-699)
Delta Reserve® Credit Card from American Express
Earn 10,000 Medallion® Qualification Miles (MQMs) and 40000 bonus miles after you spend $3,000 in purchases on your new Card in your first 3 months.
17.49% to 26.49% variable
$450
Fair (660-699)
Platinum Delta SkyMiles® Credit Card
Earn 5,000 Medallion® Qualification Miles (MQMs) and 35,000 bonus miles after you spend $1,000 in purchases on your new card in your first 3 months.
17.49% to 26.49% variable
$195
Good (700-739)
American Express® Green Card
Shop with more confidence
No interest charges because you pay your balance in full each month
$0 annual fee for the first year ($95 thereafter)
Fair (660-699)
Starwood Preferred Guest® Credit Card
Earn bonus Starpoints® after you use your new Card to make $3,000 in purchases within the first 3 months.
16.99% to 20.99% variable
$0 annual fee for the first year ($95 thereafter)
Good (700-739)

Have we missed anything in the comparison table? Tell us

Compare up to 4 providers

How charge cards work

A charge card is slightly different from a credit card, but don’t be intimidated. You can use one just like you use any other card — simply swipe or insert your card, if it includes a chip.

When your bill arrives, you have one choice: Pay the whole thing. A charge card can be convenient in that sense, because it forces you to clear your slate each month. It also means that you won’t pay interest on your charges.

There are exceptions, however. If you qualify, American Express will let you carry a balance on your charge card through Pay Over Time. Pay Over Time can be applied to purchases of $100 or more and eligible travel charges. If you apply for this option, you’ll be the proud owner of a rare charge–credit hybrid card.

Credit limits vs. preset spending limits

When you’re approved for a credit card, your approval will include a credit limit — that is, an amount over which you can’t spend. A charge card, meanwhile, will likely advertise “no preset spending limit.”

charge card 3
“No preset spending limit” means that your card doesn’t allot a specific credit limit. It doesn’t mean that you can spend as much as you want. Instead, your card provider will set a spending limit based on factors like your income and previous spending levels.

With a credit card, you’ll know what your credit limit is. With a charge card, you might not know this amount. You could unwittingly exceed your spending limit, at which point your card would be declined when you attempt to make another purchase.

To avoid hitting your spending limit, contact your card provider to confirm what your limit is. Alternatively, slowly test the boundaries of your spending limit: Spend a little at first, and notify your card issuer or if you plan on making purchases that may put you over your limit.

As a rule of thumb, assume your limit is two to three times your average balance over the last few months.

Why use charge cards?

Credit cards have a few advantages over charge cards. But you may find a charge card worth picking up for a few key benefits.

  • It builds in automatic debt prevention. People can get in trouble with credit cards when interest sneaks up on them. This situation is less likely with a charge card, because you must pay your balance in full each month.
  • No preset spending limit. Unlike a static credit limit, your spending limit can vary. This means that you can ask your card provider to approve purchases that go over your spending limit. And of course, you can request an increase in your spending limit.

Forgetting to pay can cost you

If you rack up a big balance on a typical credit card and you’re not prepared to pay it off, you can make the minimum payment. But that’s not an option with a charge card — it’s all or nothing.

That said, watch your balance carefully if you’re using a charge card. If you can’t pay when your bill is due, you’ll be hit with painful late fees.

For American Express, you’ll be charged $27 if you pay late the first time. If you pay late again within the next six billing periods, you’ll be charged a $38 fee. And if you miss two consecutive billing periods, you may have to pay 2.99% of the amount you owe. Your credit score may also take a hit if you pay late, which could lead to longer-term financial trouble.

Keep your balances in check and keep track of your due dates, and it’ll be smooth sailing with your charge card.

Will a charge card affect my credit score?

Your credit score will dip slightly when you apply for a charge card. But this isn’t any different from the dip you’d see when applying for a credit card.

When considering your application, your card provider will initiate a hard pull on your credit report. This means they’re checking your credit history to decide whether to take you on as a cardholder. A hard pull causes your credit score to drop a few points, but you’ll soon recover those points with timely card payments. Your credit score may drop a bit further overall, because getting a new card lowers your average account age. Again, this drop is typical for all credit cards.

Do charge cards affect credit utilization?

If you have credit cards, you’ll know what your credit limits are. Then it’s easy to calculate your credit utilization. It’s a different story with charge cards, because they don’t have credit limits.

Without a credit limit to work with, some card providers may report the highest balance you’ve had on your charge card within a certain amount of time. This could serve as your card’s effective credit limit.

For example, say you typically spend a few hundred dollars a month on your card. If your highest balance is $500, your credit utilization may look high if your card provider reports that as your credit limit. But if your highest balance is $5,000, your credit utilization may seem low.

This doesn’t mean you have to start worrying about your highest balances. FICO, the go-to credit score provider, says they don’t use the “highest balance” model to calculate scores. So, your charge card won’t affect your credit utilization or credit score — at least where it matters.

Did you know?

Your credit utilization makes up about 30% of your credit score. That’s second only to your payment history, which makes up 35% of your credit score.

Charge cards vs. credit cards

  • Balances and interest. You can carry a balance on a credit card, paying interest for the privilege. You can’t carry a balance on a charge card, so you won’t pay any interest.
  • Credit and spending limits. Your credit card will have a credit limit. Your charge card doesn’t have preset spending limits — but like a credit card, you’re not entitled to unlimited spending.
  • Credit utilization ratio. Credit card spending will affect your credit utilization. Charge card spending won’t.
  • Costs. Charge cards tend to come with higher annual fees than credit cards. Late and returned fees are about the same for both card types.
  • Rewards. American Express charge cards come with travel benefits. But you’ll find many types of credit cards, from travel to cash back to secured and more.

Next steps: Where to get a charge card

Ready to apply for a charge card? Start by comparing those offered by American Express.

Compare credit cards

Rates last updated June 19th, 2018
Name Product APR for Purchases ( Purchase Rate ) Intro APR for Balance Transfer Annual fee Product Description
Amex EveryDay® Credit Card
14.74% to 25.74% variable
0% Intro APR for 15 months
$0
Earn 15000 Membership Rewards® Points after you use your new Card to make $1,000 in purchases in your first 3 months.
Deserve® Classic Card
24.49% variable
$39
Designed to help build credit history with no deposit required and access to benefits.
Apply now Read review
Bank of America® Cash Rewards Credit Card
14.74% to 24.74% variable
0% Intro APR for 12 statement closing dates (with whichever is greater, $10 or 3% balance transfer fee)
$0
Earn more cash back for the things you buy most.
Blue Cash Everyday® Card from American Express
14.74% to 25.74% variable
0% Intro APR for 15 months (with whichever is greater, $5 or 3% balance transfer fee)
$0
Earn $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive the $150 back in the form of a statement credit.
Luxury Card Mastercard® Black Card™
16.49% variable
0% Intro APR for first 15 billing cycles (with whichever is greater, $5 or 3% balance transfer fee)
$495
Mastercard Black Card members receive an annual $100 air travel credit toward flight-related purchases including airline tickets, baggage fees, upgrades and more.
Apply now Read review
Chase Sapphire Preferred® credit card
17.49% to 24.49% variable
$0 annual fee for the first year ($95 thereafter)
Earn 50000 points when you spend $4,000 on purchases within the first 3 months of your account opening, and an additional 30,000 points when you spend a total of $30,000 on purchases within the first year of your account opening.
Indigo® Platinum Mastercard® Credit Card
23.9% variable
$75 annual fee for the first year ($0 to $99 thereafter)
With this card you get a 23.9% variable APR.
Apply now Read review
The First Access VISA® Credit Card
29.99% variable
$75 annual fee for the first year ($48 thereafter)
Access credit even if you have poor or limited credit history.
Apply now Read review
Luxury Card Mastercard® Gold Card™
16.49% variable
0% Intro APR for 15 billing cycles (with the amount of each transfer, $5 or 3% balance transfer fee)
$995
Earn points every time you spend. Luxury Card enhances your purchasing power by providing you with one (1) point for every one dollar ($1) you spend. Every purchase gets you closer to the rewards you want.
Apply now Read review
Chase Sapphire Reserve®
17.49% to 24.49% variable
$450
Earn 50000 BONUS POINTS after spending $4,000 on purchases in the first 3 months from account opening* — that's $750 toward travel when you redeem through Chase Ultimate Rewards®.
Credit One Bank® Visa® with Free Credit Score Tracking
17.49% to 25.49% variable
$0 to $75 first year annual fee for the first year ($0 to $99 thereafter)
Get 1% cash back rewards on eligible purchases including gas, groceries, and services such as mobile phone, internet, cable and satellite TV, terms apply.
Apply now Read review
Amex EveryDay® Preferred Credit Card
14.74% to 24.74% variable
0% Intro APR for 12 months (with whichever is greater, $5 or 3% balance transfer fee)
$95
Earn 15000 Membership Rewards Points after you use your new Card to make $1,000 in purchases in your first 3 months.
Chase Freedom Unlimited® credit card
16.49% to 25.24% variable
$0
Earn unlimited 1.5% cash back on every purchase – it's automatic. No minimum to redeem for cash back.
Bank of America® Premium Rewards® Credit Card
17.49% to 24.49% variable
$95
Earn unlimited 2 points for every $1 spent on travel and dining purchases and 1.5 points for every $1 spent on all other purchases.
Quicksilver® from Capital One®
14.24%, 19.24% or 24.24% variable
0% Intro APR for 9 months (with 3% balance transfer fee)
$0
Earn unlimited 1.5% cash back on every purchase, every day
Chase Freedom® credit card
16.49% to 25.24% variable
0% Intro APR for 15 months (with whichever is greater, $5 or 5% balance transfer fee)
$0
Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate and unlimited 1% cash back on all other purchases.
Bank of America® Travel Rewards Credit Card
16.49% to 24.49% variable
$0
20,000 online bonus points offer. Ditch the restrictions of typical airline rewards cards. Any airline, any hotel, anytime. No blackout dates.
Chase Slate® Credit Card
16.49% to 25.24% variable
0% Intro APR for 15 months (with $0 for transfers in first 60 days. Then $5 or 5% balance transfer fee)
$0
Jumpstart your financial fitness! 60 day introductory balance transfer offer, save on interest, and get your free monthly credit score.
Venture® from Capital One®
14.24%, 19.24% or 24.24% variable
$$0 intro for the first year, $95 after
Earn 50000 bonus miles once after spending $3,000 on purchases within the first 3 months from account opening.
HSBC Cash Rewards Mastercard® credit card
14.49%, 18.49% or 24.49% variable
0% Intro APR for 15 months (with whichever is greater: $10 or 4% balance transfer fee)
$0
Earn unlimited 1.5% cash rewards on purchases.

Compare up to 4 providers

Frequently asked questions

Kevin Joey Chen

Kevin Chen is a world-travelin', copy-writin', Game of Thrones-watchin' credit cards writer for finder.com. When he's not crunching the numbers on bonus points and comparing APRs, you can find him flying around the world in search of the perfect beer.

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US Credit Card Offers

Important Information*
Deserve® Classic Card
Deserve® Classic Card

APR

24.49
variable

Annual fee

0 For the first year
More info
Luxury Card Mastercard® Gold Card™
Luxury Card Mastercard® Gold Card™

APR

16.49
variable

Annual fee

995 For the first year
More info
The First Access VISA® Credit Card
The First Access VISA® Credit Card

APR

29.99
variable

Annual fee

75 For the first year
More info
Indigo® Platinum Mastercard® Credit Card
Indigo® Platinum Mastercard® Credit Card

APR

23.9
variable

Annual fee

75 For the first year
More info
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