What is the Difference Between Charge Card and Credit Card?

The main differences between charge cards and credit cards are related to spending limits, payment requirements, and credit inquiries. Here are the key differences:

1. Spending Limit: Charge cards typically do not have a preset spending limit, while credit cards do.
2. Payment Requirements: Charge cards require the bill to be paid in full each month, with no option to carry a balance. Credit cards, on the other hand, allow you to make a minimum payment each month and carry the rest of the balance over to the next month.
3. Credit Score Required: Credit cards can be obtained even with a bad credit score, while charge cards usually require a good credit score.
4. Late Payment Fees: Both charge and credit cards may have late payment fees, but charge cards often have additional penalties if the balance isn't paid in full each month.
5. Annual Fees: Charge cards typically have annual fees, while credit cards may have annual fees depending on the card.
6. Availability: Charge cards are less common than credit cards.

In summary, charge cards offer more flexible spending options but require full payment each month, while credit cards have a set spending limit and allow you to carry a balance from month to month. Both types of cards may have annual fees and late payment fees, but charge cards often have additional penalties for unpaid balances.

Comparative Table: Charge Card vs Credit Card

The main difference between charge cards and credit cards lies in how they are paid off. Here is a table highlighting the key differences between the two:

Both charge cards and credit cards can help build your credit when used responsibly. However, charge cards do not allow you to carry a balance from one month to the next, which may help prevent overspending[^2^]. On the other hand, credit cards offer more flexibility in terms of payment options and can be a better choice if you need to carry a balance when cash is tight[^3^].