A Look at Charge Cards

Did you know that there is a difference between charge cards and credit cards? These terms are often used interchangeably by those who are unsure of what each type of card has to offer. Generally speaking, a charge card is a plastic card, just like a credit card, that gives you the ability to make purchases without cash. The company that issues the card and the cardholder have an agreement that the debt on the account will be paid in full by the due date. If it is not, late fees and other restrictions may be imposed.

Where It Came From

The first charge card was offered in 1914 by Western Union. At the time, it was a simple piece of paper as opposed to the plastic card that is used today.

Charge Card vs Credit Card

Even though some people still believe that the two are the same, there are distinct differences. From the start, you should know that a charge card does not allow for a revolving balance. That being said, you do have the ability to borrow money for a specific period, usually 30 days. Without a revolving balance, when your bill comes due at the end of a particular period, such as 30 days, it must be paid in full.

If you do not pay in full, you are going to be charged a penalty. Along with this, do not be surprised if your account is suspended or revoked.

As you can see, this is much different from a credit card, on which you have to make only a minimum payment.

Most charge card issuers charge an annual fee, much as credit card companies do. It is important to be aware of this fee, as well as any others, before applying for a charge card. The last thing you want is to find that you are going to owe additional money throughout the year, just for carrying the card.

What Is My Limit?

With a charge card, you do not have a limit. This is one of the main advantages when compared to a credit card. But once again, you are required to pay the balance in full at the end of the month. In other words, you must not go overboard, or you will find yourself with a large bill that you cannot pay.

If you are interested in a charge card, you can turn to the same companies that offer credit cards. American Express is one of the biggest issuers of charge cards. Other companies that offer these include Diner’s Club, Neiman Marcus and similar retailers.

Those who need a high spending limit should consider the benefits of a charge card. There are definitely similarities between charge cards and credit cards, but the differences are enough to think twice about before making a final decision.