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Charge Card |
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While often confused with credit cards, a charge card is something else entirely. A credit card comes with a revolving line of credit which requires the card holder to make at least a minimum payment every month that a balance on the card exists. A charge card, on the other hand, requires the entire balance to be paid in full each month regardless of how large it is.
Credit cards are favored by most consumers because they enable people to make purchases and pay them off over time. Charge cards are favored by organizations as a way of managing expenses without creating debt.
Depending upon the card issuer, some charge cards do not have a pre-determined credit limit. American Express is a good example. If you are able to demonstrate that you have the financial means to pay, and you make your payments on time each month, and they never have a problem with you, the sky is the limit for how much you can charge.
Unlike credit cards, there is no finance charge associated with the use of a charge card since the balance is always paid in full. Most charge card issuers make their money from the annual cardholder fees and from the transaction fees they charge merchants who accept the card.
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Credit Card Definitions > A - E > Charge Card
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