Credit Cards

What is the Difference Between Charge Cards and Credit Cards?

The main difference between charge cards and credit cards is the ability to carry a balance over from one month to the next.

A charge card is a type of account that requires you to pay your entire statement balance in full every month.

Credit cards, on the other hand, allow you to make a minimum payment each month and revolve your balance, paying for your purchases over time.

Charge Cards
A charge card contract states that you must pay the balance in full each month and that you cannot carry over the balance from one month to the next. This type of credit card is not as common as it used to be.

Using a charge card could help you manage your finances because you can only charge what you have the means to pay each month. As a result, a charge card could reduce the risk of falling into a habit of accruing debt and accumulating interest fees. However, using charge cards may require careful planning of your finances each month.

Credit Cards
A credit card account is a revolving account. Carrying a balance from one month to the next is referred to as "revolving" the balance.

With a revolving account, you can decide whether to pay the balance off in full at the end of each billing cycle or to make a minimum payment and carry a balance over from month-to-month. However, any balance carried over from the previous month will typically be charged an interest fee.

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Scoped on: 10/04/2018