Info about Charge Cards
Charge Cards
Many people think that a charge card and a credit card are the same thing, but they are really very different. A credit card has a revolving line of credit and the holder is allowed to charge up to a certain limit as long as he makes the minimum payment every month. A charge card, on the other hand, lets the holder charge purchases, but the entire balance has to be paid every month. Charge cards are actually better for this reason because it does not all consumers to run a large debt with a very high interest rate.
Charge cards do not have a credit limit that is determined in advance. However, the amount charged to the card is the amount you must pay in full at the end of the billing cycle. Your spending and payment record, your credit score, and income all determine how much you are able to charge. There is no interest charged for charge card balances because you must pay off your balance in full every month by your due date. With that being said, you may be charged substantial late fees and penalties if your payment is late. These fees and penalties are determined by the terms of your charge card agreement. The terms and agreement for a credit card include a spending limit and a specified interest rate that will be paid. Some credit cards allow you to pay off your balance within thirty days with no interest charge.
There are some charge cards that have the option to carry over part of the charges. American Express is one charge card that offers their card holders flexibility with their payments. This means that under certain circumstances the user is allowed to make a monthly payment on certain purchases. If the balance is carried over past the due date there is interest charged for the credit.
The very first charge card was established by Diners Club. It came out in 1950 and it was a cardboard card. It was nine years later before American express distributed a plastic card to its approved card holders.
American Express clearly is the most distributed and used card today. It is virtually the only charge card used today. There may be some much less popular charge cards that are not nearly as widely used, but American Express is clearly the leader in the charge card industry.
Some people prefer a charge card over a credit card because it lets them build a credit history without incurring a lot of high interest debt. This is because the charges are reported to the credit bureaus, but the entire balance is required to be paid at the end of the statement period. Good to excellent credit is usually required to get a charge card.
Just like credit cards, charge cards often offer rewards. There is usually an annual fee that is charged to enroll in these reward programs. American Express has a reward program that is called Membership Rewards.