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What’s the Difference Between a Charge Card and a Credit Card?

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What’s the Difference Between a Charge Card and a Credit Card?

Million Mile SecretsWhat’s the Difference Between a Charge Card and a Credit Card?Million Mile Secrets Team

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Million Mile Secrets reader Vince commented:

According to Chase, the Ink Bold card has been discontinued due to “confusion” by users about the spending limits, which changed from month-to-month.  Most users never understood the difference between a charge card (like Ink Bold) and a credit card (like Ink Plus), and probably still don’t.

Maybe Daraius can devote an article or even a short series explaining the difference?

What's The Difference Between A Charge Card And A Credit Card
Do You Know the Difference Between a Charge Card and a Credit Card?

Difference Between a Charge Card and a Credit Card

A credit card, like the Chase Ink Plus card, has a fixed spending limit (credit limit).  This means you can spend up to your credit card limit every month.  With a credit card, you do NOT have to pay your balance in full.

You can make minimum payments over time.  However, I do NOT recommend this because you’ll pay interest.

Whereas a charge card, like the American Express Platinum card, does NOT have a fixed spending limit. But that doesn’t mean that you can spend an unlimited amount on it.  It just means that the bank will evaluate the maximum purchase which you can make.

However, you have to pay your balance in full every month, something you should always do to avoid paying interest.

A charge card is good for folks who have high monthly expenses that vary each month such as Big Spenders.

Most banks don’t offer charge cards, and instead offer credit cards.  However, American Express offers many charge cards.

Bottom Line

Not knowing the difference between a credit card and a charge card can cost you a lot of money.  Credit cards have a set spending limit and can be paid over time.

While charge cards have no preset spending limit and have to be paid in full each month.

American Express offers the most charge cards.

Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)

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I always have a question. What happens if you have a charge card and do not pay in full each month? Will banks charge interest? And how much is the interest? Because it doesn’t set an interest rate at the time you apply the card. And if you do not pay in full after due day, can you still spend with that charge card?

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Million Mile Secrets

@Matt – Yes, they will charge interest. And it will be high (you can call to find out the specific rate).