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Charge Card or Credit Card?

By: TaoCredit Staff Published: March 16, 2011

Both a charge card and credit card provides a credit line to which cardholders can use to make purchases. That is essentially, where the similarity ends. The fundamental difference between a credit card and a charge card is that credit cards allow you to keep a balance while charge cards require cardholder to pay off the full balance every month. One of the most popular charge cards available is American Express cards. Interests are charged on unsettled balances each month with traditional credit cards. On the contrary, because balances are settled every month, there is no interest payments involved with charge cards. Although charge cards may seem like an ideal way to build or rebuild an individual's credit score, cardholders should be wary. Charge cards typically do not have a predetermined credit limit and can lead to irresponsible spending behaviors. This behavior may be what lead people into debt in the first place. So whether you choose a credit card or a charge card, it is vitally important to spend wisely and responsibly.