charge card vs credit card

People are sometimes confused with regards to credit cards and charge cards. They often think one is a synonym of the other. But the reality is that the two cards are not the same.

Credit cards are those that allow one to make purchases on a credit system and it allows turning round the credit balance. This means that you can pay less than the actual amount to be paid and the balance amount can be carried on to the next month’s credit. On the other hand, charge cards are those that require you to complete the payment, which means that you are not allowed to carry over the balance to the following month.

Another difference between credit and charge cards is in the credit limits. The charge cards do not give credit limits, which means that you can have limitless credit. Credit cards have fixed credit limitations and if a person exceeds the credit limit, a fine is charged.

While credit cards allow a person to have a balance in his account, charge cards do not allow such balances. In terms of interest, charge cards do not come with any interest as they do not allow carry over. On the contrary, credit cards come with interest as they allow carry over of the credit. But the good part is that there is no need to pay any interest with credit cards if the payment is made before the grace period.

All the charge cards come with an annual fee, whereas only some credit companies charge annual fees.

Summary

1. Credit cards are those that allows one to make purchases on a credit system and it allows turning round the credit balance. This means that you can pay less than the actual amount to be paid and the balance amount can be carried on to the next month’s credit.
2. Charge cards are those that require you to complete the payment, which means that you are not allowed to carry over the balance to the following month.
3. All the charge cards come with an annual fee, whereas only some credit companies charge annual fees.
4. While the charge cards do not give credit limits, credit cards have fixed credit limitations.

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