You may come across charge cards when exploring different types of credit cards. While you can shop with both cards, they work a bit differently. Charge cards need you to pay off the entire balance each month.
Credit cards give you more flexibility. They let you carry a balance, but you’ll have to pay interest on the outstanding due. Meanwhile, charge cards are meant for high spenders and may offer premium perks without the flexibility. Knowing these differences can help you make the right choice.
Important Differences
To understand which card to get, have a look at the differing factors:
Criteria | Credit Cards | Charge Cards |
Annual Fees | Some companies offer the option of lifetime cards | Typically have higher annual fees than credit cards |
Interest | Charges interest on carried-over balances | Usually have no interest rates but a very high penalty is applied on unpaid dues as balances cannot be carried over |
Approval Process | Has a fairly simple process related to eligibility | Harder to get approval |
Payments | Requires a minimum payment each billing cycle and is a form of revolving credit | Requires full payment at the end of each month |
Credit Score Required | Can be obtained with a lower credit score | Requires a higher credit score for approval |
Credit Utilisation | Firm spending limit; usage impacts credit score | No limit; usage does not affect credit utilisation ratio |
Options | Numerous options with varying benefits and drawbacks | Limited choices |
Key Benefits
Both the cards come with their own set of advantages. Here are the key benefits of charge cards and credit cards:
Charge Cards
Reward Programs
Many charge cards offer rewards like points or cashback on purchases. You can earn benefits that enhance your spending, whether it’s discounts on services or travel perks.
No Credit Limit
Charge cards allow for limitless spending as they don’t usually have a preset credit limit. Approval is based on your spending patterns, allowing you to make larger purchases without a limit.
Interest-Free Payments
Charge cards typically don’t charge interest. You must pay the full balance each month. That helps you avoid extra costs associated with carrying a balance.
Credit Cards
Increased Financial Flexibility
Credit cards allow you to make large purchases and spread payments over time with EMI conversion. You can also pay the minimum balance for the month and continue using your card.
Wide Acceptance
Credit cards are one of the most commonly accepted forms of payment across the world.
Reward Programs
Most credit cards provide rewards, such as cashback or discounts on products and services. These rewards add value to your purchases and can enhance your spending power.
Credit Score Building
Using a credit card responsibly can improve your credit history. Making on-time payments and keeping your credit utilisation below 30% can boost your credit score.
Main Considerations
Before applying for either card, you need to consider a few important factors. They include:
Charge Cards
Annual Fees
Many charge cards have a high annual fee, which can vary by issuer. Keep this cost in mind when comparing options.
Limited Availability
Charge cards are less common. If you want variety, consider exploring various credit cards available today.
Late Fees
You must pay off your charge card balance in full each month. Missing a payment can lead to hefty late fees.
Credit Cards
Annual Fees
Such cards may or may not come with yearly maintenance fees. Choose a lifetime-free credit card so that you can save on the joining and annual fee. There are many such cards available right now.
Minimum Payment Due
Always make at least the minimum payment on your credit card. Missing payments can hurt your credit score and lead to higher dues.
Debt Accumulation
High balances can lead to interest charges and can negatively affect your credit score. Credit cards require you to manage your debt wisely so that it doesn’t hamper your financial growth.
Which One to Choose
The right card for you will depend on your personal goals and financial situation. Charge cards can help you avoid falling into a debt trap as they require immediate payment without the option to carry forward unpaid dues. However, their options are limited. They also come with high annual fees.
Credit cards give you many choices, even if you have a bad credit score. However, they can cause a buildup of debt. There’s no perfect answer for which card to get. By knowing the differences, you can assess your finances and needs to make a decision that works for you.
To find the right card for you, look at the different types of credit cards and the best credit card offers in India. One option you can consider is the One Credit Card. It is a lifetime-free card. That means it comes with zero annual and joining fees, and you can earn 5X monthly reward points on your top two monthly spending categories.
Moreover, you can save with a wide range of discounts on shopping, dining, upskilling, rental payments, and more. With its powerful mobile application, you can control all aspects of your spending. Download the app or visit the website and apply now!
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