What’s the difference between a charge card and a credit card?

While people always use the two names interchangeably, credit and charge cards are two completely different things. They both help you to make a purchase without having any hard cash by one allows you to carry the balance from month to month

What is the big difference?

The charge card is a credit card type  that requires you to make the payments on at the end of every billing cycle in place of the monthly minimum payments on the balance over some several months. Charge cards will automatically force you to take responsibility of your spending because you have to make the payments on the balance at the end of each month.

The credit card, on the other hand will allow you to have a revolving balance. You can pay off the balance over a certain period of time. Customers are more attracted to the credit card just because of the convenience that comes with it; you can make minimum payments, which is not quite like the credit cards.  This is also why some people find themselves getting into credit card debt faster than they would with the charge cards.

The charge cards do not have any preset credit limit. This allows you to spend much more when you are out doing shopping.  However, the charge card issuers do not issue a soft spending limit for the owner of the charge cards.  The spending limit is based on some number of factors which mainly include the payment habits, income and your spending habits. Today, only a few banks issue you with charge cards American express being the most famous one.

Credit cards have a set credit limit that is imposed when the lender approves and activates your credit card, the limit stays the same unless the bank changes your approval for a credit limit or the issuer decides to lower the limit due to several factors.  

If you exceed the spending limit on the credit card, you may receive major penalties.  For instance, the lender can decide to have your interest rates increase when you exceed the spending limit on the card. You need to have good credit history in order to receive a charge card from any kind of lender. You can get credit cards regardless of the type of history you have depending on the different kinds of lender.


There is no payment on interest on the charge card because you are not allowed to carry the balance beyond the lender’s grace period.  If you do not make the full payment on the due date, however, you are going to face a steep penalty.  The fee is normally a flat fee or percentage of the balance depending on the terms of the card.

Credit cards have a late fee charge when you do not make the minimum payments on the due dates.  Charge cards do not have any interest rates imposed while credit cards do.  The interest rates on the credit card influence how much you will pay for carrying a balance on the credit card.