![\"Aspire-Canada](\"https:\/\/aspire-canada.com\/wp-content\/uploads\/2015\/05\/newcreditcards.jpeg\")
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Have you ever noticed that some cards offered by major banks are not actually credit cards, but are in fact<\/p>\n
charge cards? These products look just like credit cards, and are in many ways similar, but there some<\/p>\n
important differences.<\/p>\n
With a credit card, account holders can choose to avoid interest by paying their entire month\u2019s statement<\/p>\n
balance in full, or they may carry a balance and incur interest charges. But with a charge card, each<\/p>\n
month\u2019s statement balance must be paid in full and on time, or the cardholder will be considered in<\/p>\n
default.<\/p>\n
Most credit cards are issued with a preset credit limit. Cardholders can charge up to that limit, and if they<\/p>\n
need to charge more, they must first call to have a larger line of credit extended. Typically with a charge<\/p>\n
card, there is no predefined credit limit. Cardholders who are concerned that a large charge might not be<\/p>\n
approved can contact the card issuer and get a charge pre-approved, but otherwise they may not have an<\/p>\n
indication of their charging ability until a purchase is denied.<\/p>\n
A credit card will also have a different structure of rates and fees. For example, since credit card issuers<\/p>\n
can make a profit on interest charges, they have the ability to offer cards with no annual fee. On the other<\/p>\n
hand, charge card issuers will almost always have to charge an annual fee to recover their cost of doing<\/p>\n
business. And by its nature, a charge card will tend to lack features such as promotional financing,<\/p>\n
balance transfers and cash advances. In addition, there are dozens of banks and credit unions that issue<\/p>\n
credit cards, but there are very few companies that issue charge cards, such American Express and<\/p>\n
Diner\u2019s Club. Finally, charge cards are generally offered to applicants with an excellent credit history,<\/p>\n
while there are a variety of different credit cards that are marketed to people with varying credit profiles.<\/p>\n
(You can get two of your credit scores for free on Credit.com to give you an idea of whether you\u2019ll meet<\/p>\n
a card issuer\u2019s credit guidelines.)<\/p>\n
Both credit cards and charge cards are considered forms of credit, so a cardholder\u2019s payment history will<\/p>\n
be reported to the three major consumer credit reporting agencies. Cardholders with both types of cards<\/p>\n
can improve their credit by making their payments on-time, but they can also hurt their credit if they fail<\/p>\n
to make their minimum payment on time. The difference is that with a charge card, the minimum<\/p>\n
payment is always equal to the last statement\u2019s entire balance.<\/p>\n
Otherwise, both types of cards can offer valuable rewards in the form of cash back, points or miles.<\/p>\n
Furthermore, both these types of cards can offer cardholder benefits such as travel insurance, purchase<\/p>\n
protection and concierge services. Nevertheless, charge cards tend to be more feature-filled than many<\/p>\n
credit cards, as they appeal to a higher end of the marketplace that is willing to pay annual fees.<\/p>\n
American Express, which is a major issuer of charge cards, offers a feature to cardholders that allows<\/p>\n
them to extend payment in some cases. Its Pay Over Time program allows its charge card customers to<\/p>\n
finance charges in one of three ways:<\/p>\n
1. Extended Payment can be applied to charges of $100 or more.<\/p>\n
2. Select & Pay Later allows cardholders to manually select individual charges on which to extend<\/p>\n
payment.<\/p>\n
3. Sign & Travel lets cardholders automatically extend payment on eligible travel expenses.<\/p>\n
In each case, the purchases move from the charge card balance to the Pay Over Time balance, and are<\/p>\n
subject to standard interest rates based on the cardholder\u2019s credit-worthiness.<\/p>\n
A credit card can be the better option for anyone who needs to regularly carry a balance on their<\/p>\n
purchases. However, those who may need to carry a balance occasionally may find a charge card with an<\/p>\n
extended payment option to be sufficient. Those who are confident that they will always pay each<\/p>\n
month\u2019s balance in full can feel free to choose from either credit or charge cards, depending on which<\/p>\n
one offers them the most desirable features and benefits.<\/p>\n
When you examine both the similarities and differences between credit and charge cards, the right<\/p>\n
product for your needs will become clear.<\/p>\n
Note: It\u2019s important to remember that interest rates, fees and terms for credit cards, loans and other<\/p>\n
financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other<\/p>\n
financial products cited in these articles may have changed since the date of publication. Please be sure<\/p>\n
to verify current rates, fees and terms with credit card issuers, banks or other financial institutions<\/p>\n
directly.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Have you ever noticed that some cards offered by major banks are not actually credit cards, but are in fact charge cards? These products look just like credit cards, and are in many ways similar, but there some important differences. With a credit card, account holders can choose to avoid interest by paying their entire…<\/p>\n