The Ultimate Guide to Credit Cards
Monday, February 6, 2023

3 Key Differences — Charge Card vs. Credit Card

Charge Card Vs Credit Card

credit card advice

Eric Bank

Written by: Eric Bank

Eric Bank

Eric Bank has been covering business and financial topics since 1985, specializing in taking complex subject matters and explaining them in simple terms for consumer audiences. In addition to his work on CardRates.com, Eric has appeared regularly on Credible.com, eHow, WiseBread, The Nest, Get.com, Zacks, Chron and dozens of other outlets. A former software engineer, Eric holds an M.B.A. from New York University and an M.S. in finance from DePaul University.

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Edited by: Lillian Guevara-Castro

Lillian Guevara-Castro

Lillian brings more than 30 years of editing and journalism experience. She has written and edited for major news organizations, including The Atlanta Journal-Constitution and the New York Times, and she previously served as an adjunct instructor at the University of Florida. Today, she edits all CardRates content for clarity, accuracy, and reader engagement.

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Advertiser Disclosure

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.

Differences (3) | Top Charge Cards (3) | Top Alternatives (10)

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® 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:

The Platinum Card® Review

at the issuer'ssecure website

CATEGORY RATING

★★★★★
4.9

OVERALL RATING

  • Earn 125,000 Membership Rewards® points after you use your new card to make $6,000 in purchases in your first 6 months of Card Membership
  • Earn 5X Membership Rewards® points for flights booked directly through airlines or American Express Travel, on up to $500,000 on these purchases per calendar year. Also earn 5X Membership Rewards® points on prepaid hotels on AmexTravel.com. Earn 1X points on all other purchases.
  • $200 annual hotel credit, $200 annual airline fee credit, $25 monthly Equinox credit, $15 monthly Uber cash credit, $50 bi-annual Saks Fifth Avenue credit, and more.
  • Platinum Card Members have unlimited complimentary access to all locations of The Global Lounge Collection, including 1,400 airport lounges across 650 cities.
  • Automatic Marriott Bonvoy Gold Elite Status and Hilton Honors Gold Status. Enrollment required.
  • Choose among three card designs
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
18.99% - 25.99% Pay Over Time
$695
Excellent
American Express® Gold Card Review

at the issuer'ssecure website

CATEGORY RATING

★★★★★
4.8

OVERALL RATING

  • Earn 75,000 Membership Rewards® points after you spend $4,000 on purchases on your new card in your first 6 months of card membership
  • Earn 4X Points at U.S. supermarkets on up to $25,000 per calendar year in purchases. Also earn 4X Points at restaurants, including takeout and delivery, and 3X points on flights when booked directly with airlines or on amextravel.com. All other eligible purchases earn 1X point.
  • 0% Intro APR on eligible charges for 6 months from the date of account opening on purchases eligible for Pay Over Time, then a 18.99% to 25.99% variable APR .
  • Earn up to $10 in statement credits monthly when you pay with the Gold Card at Grubhub, Seamless, Boxed and other participating partners. This can be an annual savings of up to $120. Enrollment required.
  • Delight your senses when you book The Hotel Collection with American Express Travel. Get a $100 experience credit to use during your stay. A minimum 2-night stay is required.
  • $250 Annual Fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 6 Months
N/A
18.99% - 25.99% Pay Over Time
$250
Excellent
Business Platinum Card® from American Express Review

at the issuer'ssecure website

CATEGORY RATING

★★★★★
4.8

OVERALL RATING

  • Earn 120,000 Membership Rewards® points after you spend $15,000 on eligible purchases with your Card within the first 3 months of card membership
  • Earn 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com, 1.5X points on business categories and purchases of $5,000 or more on up to $2 million per calendar year, and 1X point for each dollar you spend on other purchases.
  • Get up to $400 back per year toward U.S. purchases with Dell Technologies, up to $360 back per year for purchases with Indeed, and $120 back per year for wireless telephone service purchases on the Business Platinum Card, plus additional credits. Enrollment is required for all.
  • Access to more than 1,400 lounges across 140 countries and counting with the American Express Global Lounge Collection®
  • Use Membership Rewards® Pay with Points for all or part of an eligible fare and get 35% of those points back, up to 1,000,000 points back per calendar year
  • $695 Annual Fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
17.24% - 25.24% Pay Over Time
$695
Excellent

+ See More Amex 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.

Discover it® Cash Back Review

at Discover Card'ssecure website

EXCELLENT CREDIT RATING

★★★★★
4.9

OVERALL RATING

  • INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300.
  • Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, and gas stations, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases - automatically.
  • Discover helps remove your personal information from select people-search websites. Activate by mobile app for free.
  • Every $1 you earn in cash back is $1 you can redeem.
  • Get a 0% intro APR for 15 months on purchases. Then 16.24% to 27.24% Standard Variable Purchase APR applies, based on credit worthiness.
  • No annual fee.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 15 months
0% Intro APR for 15 months
16.24% - 27.24% Variable APR
$0
Excellent/Good
Discover it® Balance Transfer Review

at Discover Card'ssecure website

EXCELLENT CREDIT RATING

★★★★★
4.9

OVERALL RATING

  • INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300.
  • Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, and gas stations, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.
  • Discover helps remove your personal information from select people-search websites. Activate by mobile app for free.
  • Every $1 you earn in cash back is $1 you can redeem.
  • No annual fee.
  • Click "Apply Now" to see terms and conditions.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 6 months
0% Intro APR for 18 months
16.24% - 27.24% Variable APR
$0
Excellent/Good

EXCELLENT CREDIT RATING

★★★★★
4.9

OVERALL RATING

  • INTRO OFFER: Earn an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) - worth up to $300 cash back!
  • Enjoy 6.5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 3% on all other purchases (on up to $20,000 spent in the first year).
  • After your first year or $20,000 spent, enjoy 5% cash back on Chase travel purchased through Ultimate Rewards®, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.
  • No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
  • Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 19.24% - 27.99%.
  • No annual fee - You won't have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 15 months
0% Intro APR on Balance Transfers 15 months
19.24% - 27.99% Variable
$0
Good/Excellent

EXCELLENT CREDIT RATING

★★★★★
4.8

OVERALL RATING

4.8/5.0
  • Enjoy a one-time bonus of 75,000 miles once you spend $4,000 on purchases within 3 months from account opening, equal to $750 in travel
  • Earn unlimited 2X miles on every purchase, every day
  • Miles won't expire for the life of the account and there's no limit to how many you can earn
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Enjoy two complimentary visits per year to Capital One Lounges or to 100+ Plaza Premium Lounges through our Partner Lounge Network
  • Earn 5X miles on hotels and rental cars booked through Capital One Travel, where you'll get Capital One's best prices on thousands of trip options
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
20.24% - 28.24% (Variable)
$95
Excellent, Good
Chase Freedom Flex℠ Review

at the issuer'ssecure website

EXCELLENT CREDIT RATING

★★★★★
4.8

OVERALL RATING

  • Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories each quarter!
  • 5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more
  • 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1% cash back on all other purchases.
  • No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 19.24% - 27.99%.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 15 months
0% Intro APR on Balance Transfers 15 months
19.24% - 27.99% Variable
$0
Good/Excellent

+ See More Top Offers

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.

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