What is the difference between a charge card and a credit card?

On the surface, it may seem like there is little difference between a charge card and a credit card since both help you to finance purchases to pay off at a later date. But there are distinct differences that separate them, such as when it comes to making payments and how much credit you have to spend.

Do charge cards have a spending limit?

Charge cards often don't carry a spending limit, whereas credit cards do. Since there is usually no credit limit for charge cards, you can spend without factoring in a credit utilization ratio and how that might affect your credit score. Charge cards typically require the bill to be paid in full each month.

What is a charge card & how does it work?

What’s a Charge Card? Traditional charge cards are credit cards without a preset spending limit. When you make a transaction on a charge card, it may or may not get approved, depending on factors like your payment history and spending patterns. At the end of the month, you’ll be required to repay your charge card balance in full.