It’s easy to think that “charge card” is just another way to say “credit card,” but the two actually have very different meanings. Charge cards were once widely used, but the market for them has been largely conceded to American Express (Amex). Nowadays, consumers mainly turn to credit cards for their spending needs, as the rewards and perks can be very similar.
In this article, we’ll discuss the major differences and characteristics of a charge card vs. credit card, and take a close look at three popular cards offered by Amex, as well as some of the top alternatives available with comparable benefits.
1. Charge Cards Don’t Have Pre-Set Spending Limits
Charge cards do have spending limits, it’s just that they aren’t pre-set. In other words, they can easily change over time and to accommodate special requests. You can contact the charge card company at any time (online, by phone, or via a mobile app) to check your current spending limit and to ask for a higher one. That limit is based on your financial resources and history — obviously, if you’ve missed payments in the past, it will count against you.
Credit cards come with less flexible spending limits. They can be increased over time, but not nearly as frequently as for charge cards, and the credit card companies will want to see some improvement in your credit score before it grants a significant increase. Timely payments will help in that regard.
2. You’re Required to Pay the Balance in Full Each Month
Unlike credit cards, charge cards require that you pay the full balance each month. That’s why there is no interest rate associated with a charge card, but there are stiff late fees if you don’t pay your balance on time. For Amex cards, the first late month costs $27, which grows to $38 on the second occurrence within the next six months. Two consecutive late payments will cost you the greater of $38 or 2.99% of the balance. Amex has a hybrid program called Pay Over Time that allows you to spread out the repayment of certain approved purchases, at a set financing rate.
Credit cards also charge late fees (on top of interest), and these fees may be higher than Amex’s. You avoid late fees (but not additional interest) as long as you make the minimum payment each month to the credit card company. Late credit card payments hurt your credit score, and late charge card payments may do so too – that is, if the card company reports it to the credit bureaus.
3. They Typically Have Hefty Annual Fees & Top-Notch Perks
American Express charges annual fees as high as $550. In return, you get generous rewards and money-saving perks, especially for travel-related activities. However, many credit cards now offer perks, and a few of them provide benefits as good or better than those offered by American Express — for example, see our review of the Chase Sapphire Preferred Credit Card.
Many credit cards don’t charge an annual fee, but don’t expect top rewards from them.
Top 3 American Express Charge Cards
American Express remains the only giant charge card issuer in the U.S. Diners Club runs a distant second. American Express also offers credit cards and travelers’ checks. Here are the three popular Amex charge cards:
1. The Platinum Card® from American Express
Although saddled with a $550 annual fee, The Platinum Card® from American Express is highly regarded for its generous rewards and benefits. The card charges no foreign transaction fees, and offers these benefits:
- You receive 5X points when you use the card to book flights with American Express travel or directly from the airlines
- Receive a $200 Airline Fee Credit and up to $200 per calendar year in baggage fees annually, plus worldwide access to the Global Lounge Collection
There are no interest charges on purchases, but late fees are assessed if you don’t repay your monthly balance in full. The main drawback is the steep annual fee. You may want to evaluate our best credit card alternatives (see below) that charge less.
2. Premier Rewards Gold Card from American Express
The Premier Rewards Gold Card from American Express cost less to own, but its rewards are less generous than those from the Platinum card. Still, the rewards are fairly liberal, especially if you travel a lot.
- Receive 4X points per dollar at US restaurants and grocery stores, 3X points on travel booked through amextravel.com, and 1X points on other purchases
- Receive $100 Airline Fee Credit and up to $120 a calendar year toward select dining purchases
The annual fee is $250 each year. You do not get access to the Global Lounge Collection, but there are no foreign transaction fees.
3. Amex Business Platinum Card
If your job requires frequent travel, the American Express Business Platinum Card might be perfect for you. The $450 annual fee lets you earn hefty rewards, and the signup bonus is generous, allowing for an additional 25,000 bonus points — 75,000 total — if you spend another $10,000 in the same 3-month period.
- Receive 2X points when used to book flights with American Express travel or directly from the airlines, 1.5X points for qualifying purchases of $5,000 or more, and 1X points on everything else
- Receive a $200 airline fee credit for incidental fees annually
The card rebates certain fees for TSA Precheck and Global Entry, allows access to the Global Lounge Collection, and provides a 50% additional airline bonus for first-class and business-class flights booked with the card. Drawbacks include the high annual fee and the fact that Amex cards are accepted at fewer places than are Visa and MasterCard credit cards.
5 Charge Card Alternatives
If you’d prefer to be able to carry a balance and avoid the high annual fees assessed by many charge cards, check out our list of popular credit cards below. You’ll find cards with low or no fees, as well as cards with generous rewards, signup bonuses, and plenty of other benefits.
- Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.
- Earn unlimited 1.5% cash back on all purchases.
- 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
- No annual fee
- No minimum to redeem for cash back
- Cash Back rewards do not expire as long as your account is open
0% 15 Months
- Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories each quarter!
- Unlimited 1% cash back on all other purchases - it's automatic
- 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 14.99 - 23.74%.
- 3% intro balance transfer fee when you transfer a balance during the first 60 days your account is open, with a minimum of $5.
- No annual fee
0% Intro APR on Purchases 15 months
0% Intro APR on Balance Transfers 15 months
14.99% - 23.74% Variable
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year
- 3X points on travel immediately after earning your $300 travel credit. 3X points on dining at restaurants & 1 point per $1 spent on all other purchases. $0 foreign transaction fees.
- Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards. For example, 50,000 points are worth $750 toward travel
- 1:1 point transfer to leading airline and hotel loyalty programs
- Access to 1,000+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Earn 5X points on Lyft rides through March 2022. That's 3X points in addition to the 2X points you already earn on travel.
15.99% - 22.99% Variable
- Earn $500 bonus cash back after you spend $3,000 on purchases in the first 3 months from account opening
- Earn unlimited 1.5% cash back on every purchase made for your business
- 0% introductory APR for 12 months on purchases
- Employee cards at no additional cost
- No Annual Fee
- Chase is not an affiliate partner with CardRates and does not review editorial content on our site
0% Intro APR on Purchases 12 months
N/A 12 months
13.24% - 19.24% Variable
Are You a Good Charge Card Candidate?
A charge card is not likely to be a good fit for you if you like spreading out your payments over several months, or if you don’t want to pay annual fees. However, if you travel a lot, want top rewards and have the budget for annual fees and full payments each month, a charge card may very well fit the bill.
Although they are not as popular among consumers as they once were, they certainly still have their place in the finance world. You just have to decide if they are a good fit for your situation and needs.