Charge Cards vs. Credit Cards

While most people tend to use the terms charge card and credit card to mean the same thing, this is not the case. Both allow the user to do different things with their finances; offering flexibility as well as convenience for larger purchases. However, before you sign up for either, you'll want to consider these differences.

Charge card

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A charge card is a credit card that allows you to make purchases at a variety of locations. You will charge the amount to the charge card and then receive a bill at the end of the billing cycle. While most people believe that this acts in the same way as a credit card, when the bill comes, the user must pay it off in full. A charge card does not allow the user to carry balances from month to month. There is also no limit to the charges that can be made.

Of course, this also means that the charge card does not have interest charges, but this can be difficult for a cardholder that needs to extend the payments of their purchase.

Credit card

Most everyone has a credit card in their wallet or purse. A credit card allows the user to make purchases without cash at a variety of locations. The cardholder will accrue a balance throughout the billing cycle and then receive a bill at the end of the month. Charges can carry over from month to month and will accrue interest until the full amount is paid off.

The interest rates vary from card to card. And while the entire balance does not have to be paid off each month, there is a minimum payment that cardholders are expected to make.

In both cases

The use of a charge or credit card allows the cardholder to increase their credit rating and get better interest rates on future loans. But if you're prone to being behind with payments, a charge card might be a better way to limit your spending. Since you'll have to pay it all back each month, you won't have to worry about having a balance that continues to accrue interest, even when you're not spending.

But if you like the flexibility of not having to pay off balances each month, then a credit card is the better option. In terms of keeping your credit rating high, you'll want to make timely payments as well as keep the balance to less than half of the limit that you are given.

Charge Cards vs. Credit Cards