The Ultimate Guide to Credit Cards
Thursday, July 9, 2020

What is a Charge Card? (Charge Card Definition + 3 Card Options)

What is a Charge Card? (Charge Card Definition + 3 Card Options)

credit card advice

Eric Bank
By: Eric Bank
Updated: November 15, 2019
Advertiser Disclosure

Most Americans shop using cash alternatives. Carrying cash around is inconvenient and risky, and paying by check is often a hassle. Furthermore, cash and checks will do you no good for your online purchases, as you will need some kind of account that allows you to pay for your items electronically.

One option is a charge card. Some people use this term interchangeably with credit cards, but charge cards differ from other card types in a number of ways. So, what is a charge card? Below, we’ll answer that question and take you through the ways in which they differ from other cards. We’ll also show you a few of the top charge cards available and some of the best alternatives.

Definition | How It Differs | Charge Card Options | Alternatives

Definition of a Charge Card

A charge card is defined by Investopedia as a card that charges no interest but requires the user to pay his/her balance in full upon receipt of the statement. You typically need a good-to-excellent credit rating to obtain a charge card, and using it responsibly can help burnish your credit history. The following is a summary of a charge card’s main characteristics:

  • You are expected to pay the balance in full on the monthly payment date.
  • There is no interest rate with a charge card, although annual fees and late charges apply.
  • There is no credit limit on a charge card, but that doesn’t give you unlimited spending.

Since there are no credit limits, charge card balances are not included in your credit utilization percentage and therefore don’t affect your credit score unless you fail to make timely payments. On-time payments are an important component in maintaining a healthy credit score.

How It Differs from Credit, Debit & Prepaid Cards

As mentioned, charge cards don’t extend credit beyond the monthly payment date and have no credit limit. Credit cards, by contrast, allow you to pay off your balance over many months, although you’ll have to pay interest on the unpaid amounts. Credit cards have a preset credit limit, and will decline purchases and/or apply penalty fees if you exceed the limit.

Debit cards are tied to your checking account, and will trigger overdraft charges or rejected transactions if you spend more than your balance. Prepaid cards link to cash accounts, and much like gift cards, only allow spending up to the amount credited to the card.

3 Popular Charge Cards

American Express dominates the charge card market, and you need to have a good-to-excellent credit score to qualify for these cards. Check out the following three Amex charge cards popular among consumers who qualify for them. All carry no interest charges, can earn rewards, and provide a number of premium services, such as extended warranties, travel accident insurance, and much more.

1. The Platinum Card® from American Express

The Platinum CardAmex Platinum Card provides 60,000 points when you spend $5,000 on purchases during the first three months. The annual fee is $550, and the card earns up to 5X Membership Rewards points. One of the more notable perks of this card is its annual $200 Airline Fee Credit when you fly on select airlines. Terms apply.

2. American Express® Gold Card

Amex Gold Card

American Express® Gold Card provides 25,000 points when you spend $2,000 on purchases during the first three months. The annual fee is $250 a year, which can be partially offset by the annual airline credit and monthly dining credits. The card earns up to 4X Membership Rewards points on dining and grocery store purchases. Terms apply.

3. American Express Green Card

Amex Green CardThe Green Card provides 25,000 points when you spend $1,000 on purchases during the first three months. The annual fee is $0 for the first year and $95 thereafter. The card earns 1X and 2X Membership Rewards points, and offers all of the purchase protections associated with being an Amex member. Terms apply.

(All information about the Green Card from American Express has been collected independently by CardRates.com. The Green Card from American Express is no longer available through CardRates.com.)

Alternatives to Charge Cards

Credit cards offer certain benefits not available with charge cards. They allow you to space out your payments over a number of months, can be obtained by folks with credit scores less than good (see our card reviews for poor credit), and generally offer a wider variety of targeted rewards for air miles, cash back, balance transfers, and business rewards.

GOOD CREDIT RATING

★★★★★
5.0

OVERALL RATING

5.0/5.0
  • 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
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% 15 Months
N/A
14.99%–23.74% Variable
$0
Good/Excellent

GOOD CREDIT RATING

★★★★★
5.0

OVERALL RATING

5.0/5.0
  • 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
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
14.99% - 23.74% Variable
$0
Good/Excellent

GOOD CREDIT RATING

★★★★★
4.8

OVERALL RATING

4.8/5.0
  • 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.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
15.99% - 22.99% Variable
$95
Good/Excellent

GOOD CREDIT RATING

★★★★★
4.8

OVERALL RATING

4.8/5.0
  • Earn cash back twice. Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
  • To earn cash back, pay at least the minimum due on time.
  • Balance Transfer Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 13.99% - 23.99%, based on your creditworthiness.
  • Balance Transfers do not earn cash back.
  • If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
  • There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
0% for 18 months
13.99% - 23.99% (variable)
$0
Excellent/Good
Bank of America® Cash Rewards Credit Card Review

at Bank Of America'ssecure website

GOOD CREDIT RATING

★★★★★
4.7

OVERALL RATING

4.7/5.0
  • 3% cash back in the category of your choice: gas, online shopping, dining, travel, drug stores, or home improvement/furnishings
  • 2% cash back at grocery stores and wholesale clubs
  • 1% cash back on all other purchases
  • You’ll earn 3% and 2% cash back on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, then earn 1%
  • There's no annual fee and your cash rewards don't expire. Each month, as you plan for future purchases, you can change your 3% choice category online or through our mobile app.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR for 15 Billing Cycles
0% Intro APR for 15 Billing Cycles (for balance transfers made in the first 60 days)
13.99% - 23.99% (Variable)
$0
Excellent/Good

If you’re looking for payment flexibility, the ability to earn rewards in specific categories, and no annual fee — a credit card is the way to go.

Can You Afford to Pay the Balance Each Month?

Charge cards offer a convenient way for consumers with good or excellent credit scores to pay for purchases without using cash or checks. They have high annual fees, but you don’t have to worry about interest since you have to pay the balance each month. Of course, this means charge cards aren’t for everyone.

Credit cards, on the other hand, offer convenient financing, have lower annual fees, and offer more targeted rewards programs. If the idea of being responsible for paying your balance off each month makes you nervous, a traditional credit card may be the better option.

Advertiser Disclosure

CardRates.com is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free, we receive compensation from many of the offers listed on the site. Along with key review factors, this compensation may impact how and where products appear across the site (including, for example, the order in which they appear). CardRates.com does not include the entire universe of available offers. Editorial opinions expressed on the site are strictly our own and are not provided, endorsed, or approved by advertisers.