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Charge Cards: What Are They and Are They Right For You?

September 16, 2020

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If you’ve seen the term charge card, no it’s not the same as a credit card. This guide will teach you what they are and if they’re right for you.

What is a charge card?

A charge card is a spending card that needs to be paid off every month. The limit on spend depends on your credit and payment history.

Charge cards vs. credit cards

Charge cards and credit cards look a lot alike, but there are a few key differences.

Charge cards

  • You have to fully pay off the card each month

  • The spend limit isn’t set when you open the card

  • You don’t pay interest on your charge card debt

  • Fewer companies offer charge cards

Credit cards

  • You only have to make a minimum payment each month

  • There’s a set credit limit to spending

  • You owe interest on any amount you don’t pay off each month

  • Most issuers offer credit cards

How can a charge card help rebuild credit?

Timely bill payments make up most of your credit profile. 

On-time payments are the number one way a charge card can help build your credit.

Other perks of charge cards

There are a couple extra perks to consider when you open a charge card.

Like a credit card, you can get a charge card that offers travel or membership rewards. 

Charge cards with rewards often charge a higher annual fee than credit cards, but the rewards are getting better.

Should I get a charge card?

Deciding between a charge card and a credit card can be tricky. 

No matter which one you choose, the issuer performs a hard credit inquiry. This means the lender will look at your credit which brings your credit score down a little bit.

If you’re looking to boost your credit score, a credit card works a bit faster than a charge card. 

Part of your credit score depends on your credit utilization ratio, which is how high of a balance you keep on a card versus your preset credit limit. 

Because charge cards don’t have preset spending limits, they don't have credit utilization ratios. 

But they are easier to open if you have a lower credit score.

Final thoughts

Although charge cards aren’t as common as credit cards, they might work well for you. If you typically pay off your bill in full every month, you might not see much of a difference between the two. 

Finding the right charge card with an annual fee you can manage could also give you more spending power when you need it, and rewards to boot.

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s).
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Tiffany Verbeck

Tiffany Verbeck

Tiffany Verbeck is a personal finance freelance writer and podcaster. You can find her full portfolio and the latest episodes of The Poor Me Podcast at

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