Credit Card vs Charge Card: Very often we see people carrying more cards than cash. This is probably because cards – usually ATM and credit cards – let users handle the money more safely. Most people prefer using credit cards as they give a window of some weeks before the users have to pay the amount used. However, another card that is now gaining popularity is the ‘Charge Card’.

Here in this article, we are going to tell you about the differences between credit cards and charge cards. This will help you understand which one is best for you.

What is a credit card?

A credit card lets users borrow funds up to a pre-approved limit. The most important feature of a credit card is that it gives an option to carry over the balance into future billing cycles. This means, a user can decide to pay for a purchase on a later date or can convert it into smaller instalments. 

However, you will have to pay interest on the amount that is carried forward or converted into EMIs. Also, you will be fined for not paying the amount on a fixed date. 

Also, credit cards offer features like reward points and cashback. Most importantly, they offer an excellent way to establish good credit when used responsibly. 

What is a charge card?

Just like a credit card, a charge card allows users to make purchases. But the similarity with a credit card ends here and one has to pay the balance in full at the end of each billing cycle. As the balance is not transferable, this means that the card issuer will not levy any interest. 

Also, a user may end up paying a high late payment fee in case of any delay. However, the annual fees of a charge card are generally higher than a credit card.

Credit Card vs Charge Card: Which one is right for you

Which one is right for you depends on your financial habits and needs. While credit cards are good for those who want the flexibility of converting the amount into EMIs. (However, credit cards carry their own set of risks) On the other hand, charge cards are best suited for those who can manage their finances responsibly.