Charge Cards vs Credit Cards (What’s the Difference?)

Charge cards vs credit cards – which is better and what’s the difference? If you like travelling and collect points and miles, chances are, you’ve applied for both types of cards. Most people don’t know the difference between both cards. This is bad because not knowing may potentially harm you depending on your spending habits.

VIDEO – Charge Cards vs Credit Cards (What’s the Difference?)

Charge cards

Unlike credit cards, charge cards don’t have a pre-set spending limits. That means when you get approved for a charge card, you will not be notified what your credit limit is. Despite that you don’t have a credit limit, there is still a spending cap. The charge card monitors your behaviour and if they believe you are a responsible user of credit, then you’ll be authorized to spend higher amounts of money. Typically, for big purchases, authorization from American Express is still required. I mention AMEX because they typically issue charge cards.

Unlike credit cards, you must pay your balance in full. If you don’t, you will pay 30.99% interest on your balance.

With charge cards, cash advance is usually not allowed.

Finally, if you’re wondering how charge cards make money, it’s from two main sources: annual fees and merchant fees.

Credit cards

Unlike charge cards, credit cards have a pre-set limit. After being approved for a credit card, you often know what your credit limit is. If you spend over your credit limit, you will either get charged an over the limit fee or you’ll get declined altogether.

With credit cards, you can pay in installment payments. You will get charged an interest rate which is typically 19.99%. Installment payments usually take the form of a monthly minimum based on the total amount of money in your statement balance.

Credit cards also allow cash advances.

How do credit card companies make money? They make money by charging interest on unpaid balances.


In my opinion, it’s good to get both charge cards and credit cards. The reason is that they help build up your credit score. They’re both different categories or credit loans which demonstrates your responsibility when using credit.

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