What Is A Charge Card?

June 10, 2024 By: Stephanie H. - CreditMonarch Online Writer0 comments

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Many individuals mistakenly believe that ‘charge card’ and ‘credit card’ are the same thing. Although these types of cards have some similarities, they are not the same. Charge cards share similarities with credit cards in that they can be used to make daily purchases. Cardholders are obligated to pay their entire balance each month, rather than just the minimum balance. Having an understanding of the function and benefits of a charge card is crucial before deciding to apply for one.

A charge card is a card that you can use for both online and in-person purchases. Charge cards, unlike credit cards, require cardholders to pay the entire balance by the end of their billing period. Many charge cards come with various perks and rewards, such as reward miles or cash back. To be approved for a credit card, it’s usually necessary to have good or even excellent credit.

Credit cards and charge cards are often viewed as the same thing, but there are some significant differences between them. Cardholders are required to pay the minimum balance every billing cycle by credit card companies. The amount can either be fixed or based on a percentage of the entire amount due. Cardholders have the option to make purchases now and pay for them over time with this feature. Late fees and other penalties could be incurred if you do not make the minimum payments each month. Alternatively, charge cards have no minimum balance requirements. Cardholders are required to pay their total balance at the end of each billing cycle. If you fail to pay these payments, there may be additional fees or the credit card company may suspend or close the account.

When you apply for a credit card, you will get a set spending limit that you can’t exceed without facing potential penalties. On the contrary, charge cards do not have a set spending limit. Instead, approval for purchases is based on your specific income, payment history, and credit report. The APR rate is determined by your credit history and credit score. Upon approval, your credit card comes with its specific APR rate that is displayed on your monthly statements. At the end of the cycle, any balance that remains unpaid will be charged interest according to your APR. Interest rates don’t apply to charge cards. Since you’re required to pay the balance in full each month, you’ll never have an outstanding balance to generate interest. If your balance is not paid, you may face late payment fees and other penalties.

Here at CreditMonarch, there are a variety of credit cards to choose from, check them out below

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