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What Is a Charge Card?

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What is a charge card, exactly, and how does it differ from the more familiar credit card? In today’s financial landscape, where plastic money rules, understanding the nuances of various card types is crucial.

This article delves into the realm of charge cards, shedding light on their unique characteristics and how charge cards set themselves apart from any typical credit card.

What is a charge card?

A charge card is a payment card for business owners, allowing them to make purchases and defer payments. Charge cards function similarly to any traditional credit card, enabling equivalent spending.

However, the key distinction lies in the obligation to fully pay the card balance every month, with no option for balance carryover. Moreover, unlike credit cards, which permit extended payment periods, charge cards require monthly or slightly longer balance clearance.

📚Related: Understanding Expense Card for Contract Employees

How do charge cards work?

Both charge cards and credit cards function similarly for making purchases, including swiping or inserting the card.

A charge card necessitates full balance settlement each month, and failure to do so can lead to substantial late fees, typically around three per cent of the outstanding balance.

For instance, a $5,000 charge card bill paid late could result in a minimum fee of $150.

Also, many charge cards don’t offer purchase protection under section 75 of the Consumer Credit Act.

Charge cards, owing to their lack of a preset spending limit, are an attractive option for significant purchases.

However, maintaining a strong credit history is essential to enjoy this benefit, as every card issuer closely monitors extravagant spending.

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Where can you use charge cards?

Charge cards are not as generally recognized as credit cards. Therefore, it’s best to call ahead to see if the place accepts charge cards or to bring some other form of payment just in case.

Here are some options for how you can use your charge card:

  • In some stores, restaurants, and other establishments
  • At ATMs
  • For online purchases
  • For mobile payments
  • When traveling to foreign countries


Many charge cards have different fees. However, the most common charges are these:

Annual fee. Charge cards typically have high annual fees, whereas credit cards often have low or no annual fees.

Annual fees can run into the hundreds of pounds. However, certain charge cards have a lower annual fee or don’t charge you for the first year.

Cash withdrawal fee. Typically these fees are expressed as a percentage of the amount taken out, with a minimum of about £3.

Charges for spending money overseas. If you use your charge card abroad, usually you need to pay a portion of what you spend, with a £3 minimum.

Late fee. In contrast to credit cards, an unpaid charge on a card balance incurs late fees. Usually, it is a portion of the outstanding balance.

Charges for late payment

Failure to pay your charge card bill in full by the due date may result in additional fees being applied to your account.

A late payment charge of roughly £15 is established. However, monthly payments equal to a certain percentage of the outstanding balance (e.g. 3.5%).

Moreover, if your check bounces, you’ll be charged a cost of about £20. Also, every time the credit card company contacts you about a late payment, there will be a cost of roughly £10.

In some cases, the failure to make a payment when due may result in cancellation of your card and negative marks on your credit report.

A card

Key differences between charge cards and credit cards

Even though charge and credit cards may look similar, they have some distinctions. Here are the main ones:

Spending limit

Credit cards typically establish a preset credit limit. It depends on your income and credit score.

In contrast, charge cards diverge from this pattern by often offering the absence of a credit limit. Instead, charge card issuers grant approvals for purchases based on financial patterns and individual spending habits.

Therefore, the charge card credit limit adjusts to align with the customer’s spending capacity.

Interest rate

Unlike a traditional credit card, a charge card doesn’t incur interest charges. This unique feature is a result of charge cardholders being required to settle their entire balance after each billing cycle.

This practice eliminates the necessity for interest rates on these cards, making them an attractive choice for those who are diligent about clearing their balances promptly.

On the other hand, credit card companies charge interest. If you carry a balance, you’ll likely have to pay interest. Moreover, failing to make at least the minimum payment might hurt your credit.


Charge cards bring an array of rewards to the table, catering to diverse business needs, such as employee perks and reinvestment in your enterprise.

Depending on the particular charge card, rewards may come in the form of business travel insurance, shopping vouchers, breakdown cover, cashback, golf club memberships, concierge services, and airport lounge access.

However, in terms of incentives and perks, intense competition between various credit card providers has resulted in some credit cards matching or surpassing charge cards.

Repayment terms

Charge cards demand complete and timely repayment usually every month, with no option for rollovers. A missed payment can have negative consequences.

In contrast, credit cards offer more flexibility, allowing you to distribute your balance over a series of monthly payments.

You can choose the payment amount, as long as it meets or exceeds the minimum payment specified on your monthly statement.

However, failing to pay off your credit card balance in full results in the accrual of interest charges.

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Do charge cards affect your credit score?

Charge cards have a different impact on your credit scores compared to traditional credit cards.

While the credit utilization ratio influences your credit scores through credit cards, charge cards typically lack credit limits, making credit utilization less relevant.

Charge cards contribute to specific aspects of your credit score, including payment history and credit history depth.

Effectively boosting your credit score involves using the card as intended and consistently paying off your balance in full each month.

Remember that fundamental factors affecting your credit scores, such as making timely payments, hold significance for both charge cards and credit cards. Responsible credit management is essential, regardless of the card type.


What is the purpose of a charge card?

A charge card is a special type of credit card used for making purchases, often by corporations or wealthy individuals. It works like a credit card in that you can use it to make purchases without having to take cash out of the company’s checking account.

Who offers charge cards?

Charge card usage has been mostly abandoned in favor of credit card acceptance by banking institutions. One of the few major credit card companies, American Express offers two cards with no set spending limit.

However, since you can now carry a balance utilizing the pay over time option, some contend that these cards are no longer genuine charge cards.

Nonetheless, the Capital One Spark Cash Plus is a business credit card that is still available today.

Can I get a charge card?

If you want to get a charge card, you need to have a credit history and a score of 670 or higher.

Živilė Šarkauskaitė

Živilė is a writer with a diverse background, having worked with tech start-ups and pioneering brands across various industries. Her profound interest in progress and innovation drives her to the field of Fintech, a realm that sparks her curiosity and inspires her to share insights with others.

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Please be advised that the information presented in this article is intended for general informational purposes only. It should not be construed as professional advice from swissmoney. It is important to note that swissmoney does not act as a financial adviser, and individuals are strongly encouraged to seek independent advice from qualified legal, financial, or accounting professionals before making any decisions related to cryptocurrency investments. Furthermore, investing in cryptocurrency assets carries inherent risks, and individuals should be aware that they may potentially lose all of their invested capital.

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