Student Credit Card and Credit Education Blog

I had always assumed the term “charge card” could be used interchangeably with “credit card,” only that the former was an outdated term. Recently, though, I was reading a few credit-related articles and my assumption was proven very wrong. Thus, I’d like to share with you what I learned.

While a credit card supplies their customers with a set amount of credit, the charge card does not. This type of card lets customers spend what they want, as long as it is paid off at the end of the month. You can’t carry a balance, the way you can with a credit card, so you also don’t have the chance to accumulate interest and large balances. So, you may ask, “What happens if you don’t pay off the balance?” Generally, partially paying off what you owe (or not paying at all) may result in a hefty late fee and possibly restrict your usage of the card or have it canceled entirely.

How do you get one of these cards? American Express has a number of options to receive a charge card, and they also have options for customers to prolong payments on large purchases, provided they let AMEX know ahead of time. Other companies that offer charge cards include certain retailers, such as Neiman Marcus, and Diner’s Club.

Is there an advantage to a charge card over a credit card? Unless you need a very high spending limit (which you plan to fully pay off at the end of the month) and don’t mind the annual fee they usually charge, it’ll probably make more sense for you to stick with a credit card for students. This way, if you need to, you’ll have the opportunity to carry a balance without losing the card.