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While charge cards and credit cards share a similar appearance and function, they operate differently. Both let you buy now and pay later, but their repayment terms can vary considerably.
Charge cards are less common than credit cards. CNBC Select reviews the key differences to help you decide which is right for you.
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Are credit cards and charge cards the same?
Although charge cards and credit cards may be used interchangeably, they are not the same. Credit cards allow you to carry a balance from one billing cycle to the next, while charge cards typically need to be paid in full each month. Because of how charge cards function, things like interest rates, credit limits and approvals may differ from traditional credit cards.
Key differences between charge cards and credit cards
Charge cards and credit cards are both great ways to pay for your day-to-day needs, but it’s important to know how they differ so you aren’t caught off guard.
Charge card vs. credit card
| Charge card | Credit card | |
|---|---|---|
| Interest rate | Often no interest rates as you can’t carry a balance | Fixed or variable APRs |
| Credit limit | No preset spending limit | Fixed maximum credit limit |
| Payments | Usually must be paid in full each month | Can carry a balance from month to month, but will generate interest |
| Recommended credit score | May require above-average credit scores | Available for all credit ranges |
| Annual fee | Usually, but will vary by card | Varies by card |
| Rewards | Varies by card | Varies by card |
Interest rates
Charge cards generally don’t allow you to carry a balance, so they don’t have interest rates associated with them. However, some charge cards may offer an optional pay-over-time feature that acts similarly to carrying a balance, which would come with interest.
Meanwhile, credit cards have interest rates because you can carry a balance. Interest rates can vary significantly by credit card and cardholder since your credit history is a factor.
As of December 2024, the average credit card APR is 21.76% according to the Federal Reserve. And because credit card issuers usually compound interest daily, your balance grows a little each day it goes unpaid. However, there are a number of credit cards with an introductory 0% APR period, typically ranging from six to 21 months, including the following:
Wells Fargo Reflect® Card
On Wells Fargo’s secure site
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Rewards
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Welcome bonus
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Annual fee
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Intro APR
0% intro APR for 21 months from account opening on purchases and qualifying balance transfers.
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Regular APR
17.49%, 23.99%, or 29.24% variable APR
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Balance transfer fee
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Foreign transaction fee
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Credit needed
Pros
- No annual fee
- Long introductory APR period on purchases and qualifying balance transfers
- Access to Visa Signature® Concierge
- Get up to $600 cell phone protection (subject to a $25 deductible)
- Access to My Wells Fargo Deals to earn cash back in the form of an account credit when shopping, dining
Cons
- No rewards
- No welcome bonus
- 3% fee charged on foreign transactions
The Citi Simplicity® Card may not earn rewards, but it can still save you money due to its amazing intro-APR offers.
- One of the longest intro-APR offers for balance transfers
- No annual fee
- No rewards
- No welcome bonus
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- No Late Fees, No Penalty Rate, and No Annual Fee… Ever
- 0% Intro APR for 21 months on balance transfers from date of first transfer and 0% Intro APR for 12 months on purchases from date of account opening. After that the variable APR will be 18.49% – 29.24%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening
- There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
- Stay protected with Citi® Quick Lock
Balance transfer fee
There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
Foreign transaction fee
Credit limit
Charge cards typically don’t have preset spending limits, so you may have more flexibility to make bigger purchases. But this doesn’t mean you have unlimited spending power. Instead, your purchases may be approved based on several factors including your income, repayment history and credit utilization ratio.
Credit cards have a maximum credit limit determined by your financial institution. If you attempt to spend more than your credit limit, your purchase may be denied or your card issuer may ask if you want to approve the transaction in exchange for an over-limit fee. You’ll also need to watch your credit utilization ratio with credit cards, as that makes up 30% of your FICO credit score.
Payment
Since charge cards generally don’t allow you to carry a balance, you must pay off your balance in full each month. There is no interest or minimum payment option. Any missed or late payments could result in fees and other penalties, depending on the card.
Credit cards give you the flexibility to carry your balance over time, which means you have the option to make only the minimum payment by the due date. However, the rest of your balance that you are carrying will begin to generate interest, unless you have a promotional APR offer.
Recommended credit score
Charge cards often have higher credit score requirements for approvals due to the risks of an uncapped spending limit. So you’ll want to aim for a good or excellent credit score (scores of 670 and above) to qualify for a charge card.
Credit cards, on the other hand, are much more accessible with fewer barriers to entry. There are a variety of credit cards available to many different credit profiles, including easy-to-get card options for those with bad credit or no credit at all.
Annual fee
Annual fees can vary considerably by card. There are both charge cards and credit cards with no annual fees, but charge cards often have higher annual fees. This is because charge cards have greater spending flexibility and the issuers are less likely to make money on interest charges.
Rewards and benefits
Both charge cards and credit cards can offer competitive rewards programs and other perks, but it ultimately boils down to your specific card.
Do charge cards affect your credit score?
Both charge cards and credit cards can affect your credit score.
Since charge cards don’t have a preset spending limit, they won’t affect your credit utilization rate. However, they affect other credit score factors like payment history, credit mix, amount owed and more, so it’s still important to practice good habits to build up your score.
Should I get a charge card or a credit card?
Whether you should get a charge card or credit card comes down to accessibility and personal preference. Many charge cards are geared toward businesses, so it may be harder to open a personal one.
For those looking for a card with similar features, such as no preset spending limits*, Amex has a few options including the American Express® Gold Card and The Platinum Card® from American Express. Each card has its strength with the Amex Gold’s perks focused on dining and groceries and the Amex Platinum delivering more premium travel benefits. Both cards earn American Express Membership Rewards, which are some of the most versatile rewards points on the market.
The American Express Gold Card is great for earning valuable Membership Rewards® points on dining out and at U.S. supermarkets.
- You can earn $400+ in dining and rideshare credits every year (Enrollment required for select benefits mentioned)
- Exceptionally rewarding for eligible restaurant and U.S. supermarket purchases
- No foreign transaction fees
- Larger annual fee
- Credits are more complicated, you earn them monthly or semi-annually
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Earn 60,000 Membership Rewards® points after you spend $6,000 on eligible purchases on your new Card in your first 6 months of Card Membership.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and each month automatically get $10 in Uber Cash for Uber Eats orders or Uber rides in the U.S., totaling up to $120 per year. Effective 11/8/2024, an Amex Card must be selected as the payment method for your Uber or Uber Eats transaction to redeem the Amex Uber Cash benefit.
- $84 Dunkin’ Credit: With the $84 Dunkin’ Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin’ locations.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That’s up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges with every booking of two nights or more through AmexTravel.com. Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Apply with confidence. Know if you’re approved for a Card with no impact to your credit score. If you’re approved and you choose to accept this Card, your credit score may be impacted.
- Terms Apply.
Foreign transaction fee
The Platinum Card® from American Express is a premium card loaded with annual statement credits, entertainment benefits, extensive airport lounge access, elite status perks and more. (Enrollment required for select benefits mentioned)
- Access to 1,400+ airport lounges, including Priority Pass and Amex Centurion lounges (Enrollment required)
- Statement credit offers worth up to twice what the annual fee costs
- Elite status perks for hotels and rental cars (Enrollment required for select benefits mentioned)
- High annual fee
- Many statement credit offers are complicated and are earned in increments or limited to specific purchases
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Earn 80,000 Membership Rewards® Points after you spend $8,000 on eligible purchases on your new Card in your first 6 months of Card Membership.
- Earn 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel up to $500,000 on these purchases per calendar year and earn 5X Membership Rewards® Points on prepaid hotels booked with American Express Travel.
- $200 Hotel Credit: Get up to $200 back in statement credits each year on prepaid Fine Hotels + Resorts® or The Hotel Collection bookings through American Express Travel using your Platinum Card®. The Hotel Collection requires a minimum two-night stay.
- $240 Digital Entertainment Credit: Get up to $20 back in statement credits each month on eligible purchases made with your Platinum Card® on one or more of the following: Disney+, a Disney Bundle, ESPN+, Hulu, The New York Times, Peacock, and The Wall Street Journal. Enrollment required.
- The American Express Global Lounge Collection® can provide an escape at the airport. With complimentary access to more than 1,400 airport lounges across 140 countries and counting, you have more airport lounge options than any other credit card issuer on the market. As of 03/2023.
- $155 Walmart+ Credit: Save on eligible delivery fees, shipping, and more with a Walmart+ membership. Use your Platinum Card® to pay for a monthly Walmart+ membership and get up to $12.95 plus applicable taxes back on one membership (excluding Plus Ups) each month.
- $200 Airline Fee Credit: Select one qualifying airline and then receive up to $200 in statement credits per calendar year when incidental fees are charged by the airline to your Platinum Card®.
- $200 Uber Cash: Platinum Card® Members can get out and about and explore their local area with $15 in Uber Cash for US rides each month, plus a bonus $20 in December. That can be up to $200 in annual Uber savings. Simply download the Uber app and add your Platinum Card® to your Uber account to get started. Available to Basic Card Member only. Effective 11/8/2024, an Amex Card must be selected as the payment method for your Uber or Uber Eats transaction to redeem the Amex Uber Cash benefit.
- $199 CLEAR® Plus Credit: CLEAR® Plus helps to get you to your gate faster at 50+ airports nationwide and get up to $199 back per calendar year on your Membership (subject to auto-renewal) when you use your Card. CLEARLanes are available at 100+ airports, stadiums, and entertainment venues.
- Receive either a $120 statement credit every 4 years for a Global Entry application fee or a statement credit up to $85 every 4.5 years for a TSA PreCheck® (through a TSA official enrollment provider) application fee, when charged to your Platinum Card®. Card Members approved for Global Entry will also receive access to TSA PreCheck at no additional cost.
- Shop Saks with Platinum: Get up to $100 in statement credits annually for purchases in Saks Fifth Avenue stores or at saks.com on your Platinum Card®. That’s up to $50 in statement credits semi-annually. Enrollment required.
- Unlock access to exclusive reservations and special dining experiences with Global Dining Access by Resy when you add your Platinum Card® to your Resy profile.
- $695 annual fee.
- Apply with confidence. Know if you’re approved for a Card with no impact to your credit score. If you’re approved and you choose to accept this Card, your credit score may be impacted.
- Terms Apply.
Balance transfer fee
Foreign transaction fee
If you prefer a more traditional credit card experience, there are a wide range of cards that could be a good fit. If you’re in the market for a rewards card, the Chase Freedom Unlimited® offers several valuable bonus categories and a generous welcome bonus — all for no annual fee.
The Chase Freedom Unlimited® is a no-annual-fee card that earns generous cash-back on everyday purchases and a lucrative welcome bonus.
- Valuable welcome bonus and high rewards rates
- Long intro APR for purchases and balance transfers
- No annual fee
- Has a foreign transaction fee
- Few rewarding ongoing benefits
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- 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 Travel℠, 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 travel purchased through Chase Travel℠, 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 19.74% – 28.49%.
- No annual fee – You won’t have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
- Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
- Member FDIC
Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, on transfers made within 60 days of account opening. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
Foreign transaction fee
3% of each transaction in U.S. dollars
Pro tip: You can pair this card with a Chase bank account
When you open a Chase Total Checking® account, you can earn a $300 bonus after you make at least $500 in direct deposits within 90 days of opening the account. You can also waive the monthly maintenance fee with qualifying activities.
Chase Total Checking®
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Annual Percentage Yield (APY)
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Minimum balance to open
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Monthly service fee
$12 or $0 with one of the following, each monthly statement period: Electronic deposits made into this account totaling $500 or more, such as payments from payroll providers or government benefit providers, by using (i) the ACH network, (ii) the Real Time Payment or FedNowSM network, (iii) third party services that facilitate payments to your debit card using the Visa® or Mastercard® network, OR a balance at the beginning of each day of $1,500 or more in this account, OR an average beginning day balance of $5,000 or more in any combination of this account and linked qualifying Chase checking, savings, and other balances.
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Free ATM network
With over 4,700 branches, Chase has the largest branch network in the U.S. plus access to more than 15,000 ATMs.
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ATM fee reimbursement
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Overdraft fee
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Mobile check deposit
JPMorgan Chase Bank, N.A. Member FDIC
Pros and cons of charge cards
Pros
- No preset spending limit: Charge cards don’t have a hard limit on your spending, but often adjust based on your finances and spending history.
- Avoid debt and interest: Since charge cards don’t allow you to carry a balance, you won’t collect debt or pay interest.
- Generates rewards: Many charge cards still have competitive rewards offerings.
Cons
- Can’t carry a balance: Charge cards typically require you to pay off your balance in full each month, otherwise you face a penalty.
- Higher credit score requirements: Charge cards may often have higher credit score requirements than traditional credit cards.
- Larger annual fees: Charge cards can carry hefty annual fees.
- Limited availability: Personal charge cards are not very common anymore, and may require some searching.
FAQs
Is a charge card the same as a credit card?
No, a charge card and a credit card are different in a number of ways, including payment schedules, credit usage and interest rates.
What are some disadvantages of a charge card?
Some drawbacks to having a charge card could be higher credit score requirements, larger annual fees, and not being able to carry a balance.
Is there a spending limit on a charge card?
Traditionally, charge cards do not have a preset spending limit, but this doesn’t mean you’re allowed unlimited spending. Spending limits on a charge card will often vary based on factors such as your spending history and income.
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At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every credit card article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of credit card products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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*No Preset Spending Limit means the spending limit is flexible. In fact, unlike a traditional credit card with a set limit, the amount you can spend adapts based on factors such as your purchase, payment, and credit history.
For rates and fees of the American Express® Gold Card, please click here.
For rates and fees of The Platinum Card from American Express®, please click here.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
