Charge cards are a type of payment card that require customers to pay their balance in full each month and thus do not have an interest rate or involve finance charges. Charge cards also feature no-preset spending limits that automatically adjust to customers' spending patterns, offering needed flexibility for travel and entertainment expenditures. American Express first introduced the charge card in 1958 and continues to dominate this segment of the payment cards market.
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Updated: January 16, 2018
Charge cards aren’t for everyone, but if you want superior rewards and you don’t mind a higher annual fee, they can be a good choice. They are also helpful if you sometimes need to buy big-ticket items. Here, we look at:
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A charge card, typically offered by American Express, allows you to be approved for large sums on the spot. The card issuer bases its decision on your past purchases and payments. While there’s no set limit, it’s not unlimited. The tradeoff is that you need to pay in full each month, whereas with a credit card, you can pay a minimum.
|Charge Card||Credit Card|
|Pay in full each month||Can pay minimum each month|
|No specified limit||Has credit limit|
|Can be approved for large sums||Penalized for going over limit|
|Builds credit||Builds credit|
|Typically through Amex||Most major banks|
|Often with high annual fee||Can have no annual fee|
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