What's the Difference Between a Charge Card and a Credit Card?

• written by Perjan Duro
What's the Difference Between a Charge Card and a Credit Card?

Do you know the difference between a charge card and a credit card? They might seem similar at first glance, but there are some key differences you need to know before deciding which one is right for you.

Charge Cards and Credit Cards

A credit card is a form of borrowing that allows you to make purchases and pay back the amount borrowed over time, usually with interest. You have a credit limit, which is the maximum amount you can borrow at any given time. If you pay off your balance in full each month, you won't have to pay interest. But if you carry a balance, you'll accrue interest charges, which can add up quickly.

On the other hand, a charge card requires you to pay off your balance in full each month, usually within 30 days. There is no interest charged on a charge card, but if you don't pay off your balance in full, you may be charged late fees or other penalties.

So, which one is right for you? It really depends on your financial situation and spending habits. If you're good at managing your money and can pay off your balance in full each month, a credit card might be a good option. This will allow you to build up your credit score over time, which can be helpful if you want to take out a loan or apply for a mortgage in the future.

On the other hand, if you struggle with overspending or have a tendency to carry a balance, a charge card might be a better choice. With a charge card, you'll be forced to pay off your balance in full each month, which can help you avoid getting into debt.

It's also worth noting that charge cards often come with higher annual fees than credit cards, so you'll want to make sure that the benefits of using a charge card outweigh the cost.

While charge cards and credit cards might seem similar, they have some key differences you need to be aware of. Take some time to evaluate your spending habits and financial situation before deciding which one is right for you.

MoneyCoach now supports manual credit card tracking. Set up your credit cards and activate the payment due reminders so you never have to pay those nasty credit card interests. Find more about it here.

Articles you might like

• written by Perjan Duro

7 Online Gigs to Make Money in 2023

In the fast-paced digital world of 2023, there are numerous opportunities to earn money by doing online gigs. With the rise of the gig economy, more and more people are turning to online platforms to earn a living. In