Charge cards are not the same as credit cards

Many people use charge card and credit card as synonyms.Well, they’re not.

Billing

Credit cards are more or less designed to try and get you to spend more money than you have. Once you do, you’re in debt, and you pay them interest, on top of your debt. Charge cards, on the other hand, require you to pay off the full balance each month. That means that there is no interest, because any left over balance, and you risk your account being closed.

Cash back

This is not always the case, but from American Express’s choices, I think that charge cards are more focused on other features than cash back, like airline credit or something else. Credit cards are geared to get you to spend more money than you have, so you pay interest.

Annual fees

As American Express is more or less the only company I know that has charge cards, all of my comparisons are based on them. I have yet to come across a charge card with no annual fee. The reason there is an annual fee is because the issuer doesn’t make money on interest, so they have to make money somehow. The still earn a percentage of each transaction you make, but that’s not nearly as much as a 20% APR.

Credit limit

Charge cards have no credit limit. Ok, they do, but’s it’s really high, much higher than what you can get with a credit card. There is no credit card that has an unlimited credit limit, as you can just pay the minimum, and keep on adding to your balance, and never pay all your debt off. Charge cards, on the other hand, make you pay your bill in full each month, so the issuer can afford to provide you with a million dollars because they know you’ll pay it back soon.

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