What Is the Difference Between Charge Card and Credit Card

To understand the difference between them and to know which is better, the first one should know what exactly is a charge card and a credit card. So that it’s easy for people to choose between these two.

Suggested Read: Can You Pay Credit Card With a Credit Card?

Credit Cards

Credit cards are a type of card which are given to you by the banks or any financial institutions,  enabling the cardholders to buy any kind of goods by offering them money, but you have to pay back the credit card company the funds plus the interest and any other additional charges. It’s a kind of electronic payment.

How Does a Credit Card Work

First and foremost, the company that offered you the credit card puts forward their terms and conditions, and If you agree to those, an agreement is made, and you are issued your credit card, which you can use.

 Now you can borrow credit from financial institutions. The limit is pre-decided. This limit will be decided on the basis of your credit score and history. The better your score is, the higher is the credit limit you will get from the company.

For each month, there’s a due date, and you have to pay the bill by the due date. If you are late, you’ll have to pay additional charges and interest depending on how late you are.

You are sent a record of all the transactions you have made, where you used your money, interest that you have to pay, etc., only for the sake of convenience and record.

The more punctual you are with your bills, the higher your credit score will be.

There’s also a minimum payment, I.e., if you pay this minimum payment that you owe to the credit card company by the due date and pay the rest later, you can save yourself from interest and other penalty charges.

Some companies have the system that this minimum payment is automatically deducted from the card holder’s account when the due date arrives.

So that’s how the credit card works.

Charge Card

Moving to the other part, which is the charge card.

A charge card is nothing more than a type of credit card that works a little differently than a credit card. Its functionality is a bit different, but people usually mistake these two as the same thing. Coming back to the main point, what actually is a charge card. Charge cards are also issued to the customers by the bank, financial institutions, or any credit card company. Customers can also use this card to make purchases. The card issuer pays for these purchases. You are obligated to pay for these purchases by the end of the month. They come with a number of rewards and don’t have any spending limit, unlike credit cards.

How Does a Charge Card Work

  • A charge card is not much different from a credit card, and it works in a similar way the credit card works except that there is some contrast between the two.
  • When you are using your charge card to make an online transaction, first, you need to select the mode of payment, i.e., the charge card.
  • Like credit cards, a charge card also comes with a specific code. You must know this code. Enter this code.
  • Enter the number of transactions that you want to make.
  • Once you have entered all of the data, all of this information goes to the bank, approved.
  • You will receive a code/ OTP on your registered phone number or email.
  • They’ll ask you to enter this code/ OTP.
  • Once you have entered it, you can proceed.
  • You’ll get your cash, and the Process is complete.

It’s as simple as that.

Comparison Between a Charge Card and a Credit Card

For the wider perspective, we’ll make a comparison of different points of a charge card and a credit card to make the differences between the two very clear.

Spending Limit

A charge card does not come with any spending limit, which means you can spend as much as you can without any limit. You must know your budget because the company has none, while the credit card comes with a spending limit.

Minimum Payment

The Concept of the minimum payment is only offered by the credit cards so that you can pay the minimum amount decided each month and pay the rest later, so you can save yourself from the late fees, interest, and other penalty charges. The charge cards don’t offer this facility. You have to pay your whole bills every month.

If you don’t have the opportunity of the minimum payment, you know you have to pay full each month, and if you don’t, your account will be reported to credit bureaus, and you’ll be in trouble, but with credit cards, you get this opportunity which gives you a free hand and if you don’t watch how much you spend, interest will continue to add up, and you’ll be in a lot of trouble before you know.

Card Issuers

In the case of credit cards, people are more aware of them, and they know how to use them, but when it comes to charge cards, they don’t have much idea. So this is the reason why there is a wide number of card issuers available out there but only a limited number of card issuers when it comes to charge cards.

Credit card companies have begun to assist users with low credit limits. If you’re having trouble, get the Milestone Gold Card here.

Charge Card Advantages

Charge card comes with a number of advantages which include:

One biggest advantage of a charge card is that it doesn’t have any spending limit. You can spend as much as you can without having to worry about the limit.

The other advantage of using a charge card is that if you want to purchase something that is expensive and you don’t have enough cash at the moment, but you are certain that after some time, you will be able to pay for it, a charge card will help you in this situation by offering you the amount of credit that you need at the very moment.

Charge card offers a number of rewards and bonuses. If you are using your charge card wisely, you can avail a number of offers, rewards, and bonuses, and it will also help you to build your credit score.

It doesn’t cost you any debts or any interest.

Disadvantages of Charge Cards

If you are sure you are capable of paying off each month, there are not many disadvantages of using a charge card, but if you can’t pay your bills completely by the month, it costs you a lot and has adverse effects.

While using a charge card, you’ll have to pay a sizable annual fee which is why not everyone can afford to have it.

Advantages of Credit Cards

Credit cards offer great convenience to their customers while making purchases and transactions.

Credit card companies offer loyalty programs if you make a mighty payment using a credit card.

Another benefit that the credit card offer is that it gives you insurance such as travel insurance, health insurance, safety insurance, etc

Disadvantages of Credit Cards

When you fail to pay your bills and the minimum payment monthly, you will be charged high interest.

Usage of credit cards also tends to come with bankruptcy. 

This weakens your habit of self-regulation and organization skills regarding your finances by offering you credit that you actually don’t own.


Both credit cards and charge cards come with advantages and disadvantages. If you pay your monthly bills regularly without delay, you can easily use a charge card or credit card whatever you want to, and by taking a look at all the differences, features, and peculiarities of both of them, you can make a better decision according to your needs and budget.

Disclaimer: All the information published here are for informational and educational purposes only. Moreover, all these information are researched from official sources. However, we will not warranty the information to be accurate and completed. Do not share your bank details or personal details in the comment box. For more queries visit the official website.

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