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MMMondayMemo: What’s the difference between a Charge and Credit card?
Each Monday Miles has decided to drop a tip, hint, tutorial, trick that maybe you’ve missed or haven’t heard before. If you’re an expert in this field, some of these may be things you already know, but there are a lot of beginners out there who are just getting their feet wet. This week the Monkey Miles Monday Memo explains the difference between a charge and credit card.
What is a Charge card?
A charge card is a credit card that a bank will issue a customer that must be paid in full every month. Since these cards must be paid in full the cardholder is not allowed to carry a balance on the card. Cards like the American Express Platinum card are charge cards and report no line of credit to the credit agencies.
examples of charge cards: American Express Platinum Card, Business Platinum, Centurion Card
What is a credit card?
Credit cards are what most people carry in their wallets. The bank extends a line of credit to you and the purchases you make are paid from that line. Unlike Charge cards, credit cardholders can carry a balance and pay an interest rate on the balance they carry from month to month. The bigger the balance you carry, the higher your credit utilization number will be, and the lower your score will go. An ideal credit utilization would be under 10%.
examples of credit cards: Chase Sapphire Preferred, Citi Thank you Premier, Barclay Aviator Red, American Express Delta Gold
Monkey Miles has partnered with CardRatings for our coverage of credit card products. Monkey Miles and CardRatings may receive a commission from card issuers
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