Credit Cards and Charge Cards Differ in Two Important Ways

Credit Cards and Charge Cards Differ in Two Important Ways.

The primary divergence between a credit card and a charge card is that while the former lets you brand minimum monthly payments, the latter does not. In add-on, credit cards tend to have predetermined credit limits, whereas charge cards typically come with no preset spending limits (NPSLs). Choosing between the two boils down to whether or not you’re comfortable paying off your balances in full each month.

On This Page:

  • What’s the Difference Betwixt a Charge Card and a Credit Card?
  • Do Charge Cards Have Limits?
  • What Is the Purpose of a Accuse Card?


A charge card requires that you lot pay your unabridged outstanding residuum each month.


A credit carte allows yous to make minimum monthly payments and carry forward your residuum.


Both cards report your payment histories to credit bureaus and give you the ability to build credit.

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

When you get a charge card, you typically need to pay off the entire outstanding residual at the stop of each billing cycle. Credit cards allow you do this as well, although you can also choose to make no more than your minimum payments each month and behave forward your balances. Both come with their share of pros and cons.

Accuse Cards


  • No preset credit limit
  • Low risk of accumulating debt
  • Help build credit
  • Ability to earn rewards
  • Don’t factor in your credit utilization ratio


  • Use of accuse cards has waned, as has their availability
  • Typically high almanac fees
  • No fixed credit limits may lead to doubt effectually large purchases
  • No flexibility in carrying balances forward

Credit Cards


  • Tin can get no-annual-fee alternatives
  • Aid build credit
  • Several credit cards offer rewards
  • Tend to come with a multifariousness of perks


  • Adventure of accumulating debt
  • High balances may affect your credit score
  • Need to pay involvement on balances that yous coil over

Are All American Limited Cards Charge Cards?

No, not all American Express cards are charge cards. In fact, very few fit the neb. For example, American Express continues to market its Platinum Card as a accuse card in some countries such as Australia and Republic of india. While Platinum Cardholders in the U.S. are required to pay their balance in full each month, a Pay Over Time feature is available on some purchases with a variable Apr. This makes the Platinum Card, as well every bit the comparable American Express® Concern Gilt Card, function much like a conventional credit card.

Some American Express cards, similar the Platinum Card, come with a Plan It culling. This feature lets you split up big purchases into monthly payments by paying a fixed fee and no interest charges. You may have up to ten active plans running meantime.

The The Plum Bill of fare® from American Express for businesses qualifies as a accuse carte du jour. This card gives you the option of paying your nib in full each month or of carrying forward your balance for upward to 60 days with no interest. Afterward this, a belatedly fee applies, which is either a stock-still amount or a fixed percentage of the past due amount.

American Express provides multiple credit cards with no preset spending limits (NPSLs), including the Platinum Card, the Gold Card, the Green Card and the Business Platinum Card.

Practise Other Credit Carte Companies Take NPSL Cards?

Some credit card issuers provide NPSL cards, whereas others may approve over-the-limit transactions on a case-by-example footing. The Spark 2% Cash Plus Card from Uppercase One comes with no preset spending limit. Brex offers this feature through its charge cards for businesses.

Do Accuse Cards Have Limits?

The simple reply to this is yes. However, the limit is subject area to change based on multiple factors. NPSL essentially refers to a credit limit that may vary even when your account is open. With the Spark ii% Cash Plus Accuse Card, your credit limit is based on factors such as your payment history, spending behavior and creditworthiness.

Brex lets you choose between cards that you lot may pay off every twenty-four hour period or monthly, and it determines credit limits accordingly. If you opt for the card that requires monthly payments, your credit limit is based on the balance in your Brex Cash account, the residuum in your linked bank accounts or your bank statements. With the daily payments alternative, your carte du jour’s limit is directly linked to the balance in your Brex Cash account.

With a regular credit bill of fare, yous find out your credit limit when you receive the credit card agreement. This limit is subject to change, but not as oftentimes as with charge cards. It can happen either when you request for an increment/subtract or if your card provider chooses to decrease information technology attributable to factors such equally missed payments, high credit utilization ratios, low utilization of credit and changes in spending behavior.

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While charge cards do not affect your credit utilization, making belatedly or partial payments on these cards may bear upon your credit score. Just charge what you know you tin pay off in full each month to avoid involvement, fees and negative marks on your credit report.

— Lee Huffman, credit card practiced at

What Is the Purpose of a Charge Carte du jour?

A charge card can serve dissimilar purposes. You may consider getting one if you’re motivated to pay off your balances in full every month and if you wish to minimize the possibility of accumulating debt. Business owners who demand to brand big purchases and require flexible credit limits might benefit from charge cards for concern employ.

Issuers of such cards report your payments to credit bureaus. When yous go a charge card in the name of your business and brand your payments on fourth dimension, they appear in your concern credit file. This helps build your business organization’s credit history.

Charge cards also let you lot capitalize on your spending by offering rewards. The Spark 2% Cash Plus Card from Capital One offers 2% cash back on all business concern purchases. The American Express Platinum Card offers 5x points on prepaid hotel and flight bookings made through The Brex Carte lets you earn up to 8x points on category-based spending.

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Get a accuse card only if you’re confident y’all can pay your balances in full each month. Otherwise, consider choosing from our list of top low April credit cards. Our experts have put this together past analyzing over 1,600 credit cards.

Other Questions You May Have About Accuse Cards

Here are other answers to other questions you might have about the charge card vs. credit card comparison.

Charge cards and credit cards are non the same. With a charge card, you have to pay your balance in full every month. Credit cards allow cardholders to carry a residuum from calendar month-to-month. Involvement is charged on balances that are not paid off before the stop of the adjacent argument cycle.

Qualifying for a charge menu is typically more difficult than qualifying for a credit card. Getting a charge card requires that you have good to fantabulous credit and a steady source of reasonable income, mainly because issuers expect you to pay off your balances in full every calendar month. When it comes to credit cards, you may fifty-fifty observe alternatives if yous accept boilerplate credit.

A charge card might exist a improve pick than a credit card if you desire no preset spending limit to make large purchases. However, you demand to pay your residual in full at the end of each billing wheel.

The Amex Platinum Card is a charge card. However, its Pay Over Fourth dimension characteristic for U.Due south. cardholders acts similar a credit menu for eligible purchases. This feature lets you bear forward the unpaid residue on eligible transactions by paying a variable April. The card’s Plan It feature lets you split large purchases into monthly payments, and this pick comes with no involvement.

It’s of import to annotation, however, that American Express assigns a Pay Over Time limit to your bill of fare, which applies to the combined total of your Pay Over Time, other Plan (referring to the Plan Information technology characteristic) and cash advance balances. In add-on, American Express holds the right to approve or decline a accuse fifty-fifty if your balance does not exceed this limit.

Paying off your balances in full every month is an pick, as is the case with whatsoever other credit carte.

Nearly NPSL cards are charge cards, requiring that you pay your balance in full every month, which is why they take no interest. Interest might utilize to past-due balances in the form of belatedly fees. For example, the The Plum Carte® from American Limited charges a belatedly fee of $39 or ane.five% of the by due amount, whichever is greater, if you miss your outset due date. If you miss making your payment for two consecutive billing periods, the tardily fee increases to $39 or 2.99% of the past due amount.

Given that NPSL/charge cards come up with credit limits in some form, you lot might face declined transactions when making expensive purchases.

Yes, credit cards with no spend limit take the potential of affecting your credit score. If you make your payments on fourth dimension, yous may expect a positive outcome on your creditworthiness. Still, a late or returned payment can take the opposite upshot. When information technology comes to charge cards with NPSLs, these cards are excluded from your credit utilization ratio adding through most contempo versions of FICO scoring models.

Next Steps

Now that you know the difference between a charge card and a credit carte du jour, you can select one based on your specific needs. If you’re unsure most being able to pay off your balances in full each month, opting for a depression-interest credit carte might be a better alternative.

Compare & Review Credit Cards

Our experts routinely monitor and analyze the spending trends of consumers and businesses beyond the U.South. They rely on data found in the public domain and data made available past the Bureau of Labor Statistics (BLS), and they likewise proceed an eye out for whatever changes in credit card APRs, fees and offers. They have reviewed over one,600 consumer cards and 540 business organization cards and so that you lot can easily find a suitable alternative.

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  • U.Southward. Banking concern Visa® Platinum Carte

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Learn More Most Credit Cards

The MoneyGeek editorial team keeps itself abreast with the latest changes in the world or credit cards and then we can reply your questions apace and efficiently. Whether you wish to know how rewards cards work or how to ameliorate your credit score, you can trust them to guide you in the right direction.

*Rates, fees or bonuses may vary or include specific stipulations. The content on this page is accurate equally of the posting/last updated date; yet, some of the offers mentioned may take expired. Nosotros recommend visiting the card issuer’s website for the most up-to-engagement information available.
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Credit Cards and Charge Cards Differ in Two Important Ways