Difference Between Charge card and Credit Card

What is the Difference Between Charge card & Credit card?

Difference Between a Charge card and a Credit card

What is a Charge Card?

A debit card is an electronic payment card that does not charge interest, but requires the individual to pay their balance in full upon receipt of a withdrawal, usually monthly.
Some issuers offer prepaid cards, so it’s hard to get one. These cards can come with unlimited spending limits and huge rewards for the cardholder. However, these cards can always come with a high annual fee, which can range from $150 to $550.

What is a Credit Card?

A credit card is a thin rectangular piece of plastic or metal that any bank or financial sector offers to its customers through which they can borrow money to pay for goods and services at merchants that accept payment cards.
All credit cards have terms and conditions, as cardholders must repay the borrowed money, including any applicable interest and any agreed fees, either in full by the billing date or over time.
A credit card issuer can provide a separate cash line of credit to the cardholder to help them borrow money as a cash advance, which can be accessed through bank tellers, ATMs or credit card convenience checks.

A charge card and a credit card are both financial instruments that allow you to make purchases without using cash. However, there are some key differences:

A charge card refers to a card that is used by the cardholder to make payments but must be paid in full at the end of a specified term. A credit card is a card that offers the cardholder an unsecured line of credit until the limit is exhausted.
The interest rate is applied to the outstanding balance on the credit card, but not on the debit card, as the balance must be paid in full at the end of each month or a penalty will be charged.
The spending limit is considered the main difference between the two cards, because the payment card does not have a predetermined limit. However, the credit card has a set limit. The limit is decided by the type of card you carry and your credit history.
The payment card does not allow a running balance, i.e. you have to pay the full amount at the end of each month, the unpaid balance is not transferred to the next month. A credit card allows for a running balance where you only have to pay a minimum amount.

Difference Between Charge card and Credit Card

Difference Between a Charge Card and a Credit Card

Payment Requirements: With a credit card, you have the option to pay off your balance over time by making minimum payments, and you can carry a balance from one month to the next. In contrast, a charge card typically requires you to pay the balance in full by the due date, usually on a monthly basis. This means you cannot carry a balance from one billing cycle to the next.

Credit Limit: Credit cards have a predetermined credit limit, which represents the maximum amount you can borrow on the card. This limit is set based on factors like your credit history, income, and creditworthiness. Charge cards, on the other hand, often do not have a preset spending limit. Instead, the issuer evaluates your spending patterns and payment history to determine whether to approve transactions.

Fees: Both charge cards and credit cards may have annual fees, but charge cards are more likely to have higher annual fees due to the additional benefits they often offer, such as travel rewards or concierge services. Credit cards may also have other fees, such as balance transfer fees or cash advance fees, which may vary depending on the card issuer.

Rewards and Benefits: Credit cards and charge cards may offer various rewards and benefits programs, such as cash back, travel rewards, or discounts. However, charge cards are typically associated with premium rewards programs that offer exclusive perks and higher earning potential. These benefits often come with higher annual fees and stricter eligibility requirements.

Eligibility Requirements: Charge cards generally have stricter eligibility criteria compared to credit cards. They are often targeted towards individuals with higher incomes and better credit histories. Credit cards, on the other hand, come in a wide range of options, including cards tailored for individuals with limited or poor credit histories.

It’s important to note that specific terms and features may vary between card issuers, so it’s always a good idea to review the terms and conditions of any card you’re considering to understand the specific details and benefits it offers.


After the above discussion, we can say that there are many similar aspects in the two senses, but it is also true that there are certain differences between the two cards that cannot be ignored. Choosing between the two cards is a bit tricky as both have their own advantages and disadvantages, but you can choose one of them as per your convenience.

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