Credit cards and Charge cards are different genre of payment options. Here we list the distinction to help you decide which is the best option for you.
How are Charge Cards and Credit Cards different?
The most comment payment option, used by most of us, is a Debit Card. You can use a Debit Card to the extent of balance that actually exists in your savings or current account. If the transaction amount on debit card exceeds the balance in your bank account, then your payment isn’t made.
However, at times we need to have access to extra money instantly. Sometimes we need make a purchase online or offline before our salary gets credited in our bank account. This is when we need a Charge Card or a Credit Card.
What is a Credit Card?
Credit Cards allow you to borrow money from the card issuing company for a short time. This is called “line-of-credit” which allows you to spend up to a set credit limit.
By using a Credit Card you enter into a contract; making it obligatory for you to pay back the balance owed with interest charges in case you do not pay the full amount borrowed within the due date.
What is a Charge Card?
A Charge Card does not extend a fixed line of credit to you. In case of Charge Cards, full balance of money that you spend each month is to be repaid every month. If payments are not made on due date, then a penal charge is applied to the account.
This sounds similar to a Credit Card but Charge Cards do not carry interest rates and spending limitations. Banks use them to offer exclusive perks and Membership Rewards to the customers.Both credit and Charge Cards give you an option to delay payments.They both make you repay the money you spend in a set period of time and impose penal charges if payments are not made.
However, they are different in following ways:
All types of Credit Card charge interest on the used amount. The interest rate is based on the type of Credit Card you hold.Conversely, in case of Charge Cards balance cannot be carried forward from month to month, so they do not have interest rates. Irrespective of the credit card you hold, it is always good to pay off the balance on or before the due date. This will help you completely avoid paying interest or penal charges.
Credit Cards have a pre-defined credit limit called spending limits. These limits are based on your credit rating, monthly income, etc. Card issuing companies use this to determine your eligibility for a Credit Card. As you keep using your Credit Card and make payment on due date, your credit score improves – which makes it easier to get a higher credit limit.
Charge Cards have no pre-set credit limits. Rather, they have higher penal charge which compels you to pay the balance in full every month. If you keep paying the balance each month, you can enjoy unlimited credit limit without charges. Be it a Credit Card or Charge Card, if used responsibly, helps to increase your credit score.
Find out more about your credit score
Credit Card balances attract interest each month. Interest rates are applied based on the use of a Credit Card, for example rate of interest on balance transfers, cash advances and payments for goods and services will vary. The interest charged is added to the outstanding balance on the Card while preparing the bill.
With a Charge Card the outstanding Card balance is paid directly from your linked bank account. It is advisable to pay Credit Card balances by direct debit to avoid delay in payment.
Credit Cards may or may not have annual fees. Some cards waive the annual fees on reaching a level of spends in a year. However, all Credit Cards charge interest on outstanding balances for purchases, balance transfers and cash advances, if full payment is not made on the due date.
The American Express Charge Card
American Express Charge Cards are a perfect match for consumers looking for great service with fantastic rewards. You can enjoy greater flexibility in spending as charge cards do not have a “pre-set” limit. This means that your spending limits are approved on the basis of your spending pattern, financial strength and credit history. It is worth noting that ‘no pre-set limit’ does not mean you have unlimited spending limit. American Express Charge Cards are a perfect match for consumers looking for great service with fantastic rewards. You can enjoy greater flexibility in spending as charge cards do not have a “pre-set” limit. This means that your spending limits are approved on the basis of your spending pattern, financial strength and credit history. It is worth noting that ‘no pre-set limit’ does not mean you have unlimited spending limit.
The American Express Gold Charge Card offers you one of the biggest bouquet of rewards to choose from – the Membership Rewards Gold Collection plus the American Express Membership Rewards Programme which offers over 600 exciting redemption options to choose from including free flights, hotel accommodation, shopping vouchers and more.
American Express Charge Cards offer you:
- Gold Services on American Express Gold Charge Card
- 24X7 Card Related Assistance
- Zero lost Card liability
- Emergency Card Replacement
- 2 Complimentary Supplementary Gold Cards
No pre-set credit Limit
As an American Express Gold Card member , the more you spend, the more Membership Rewards points you get. You also have an option to redeem your Points from over 600+ exciting redemption options including leading airlines and hotels, shopping and more. Flexibility in points helps you even transfer them to other loyalty programmes such as airlines (frequent flyer programmes) and hotels (frequent guest programmes).
Can you apply for an American Express Charge card?
To be eligible for an American Express card, you must meet the following criteria.
- Be over 18 years of age
- Have a good credit history and no payment defaults
- If self-employed: My company has been trading for more than 12 months.
- Gross Annual Income should be more than Rs.6 Lakh
- Should have an existing credit card from some other bank
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