Charge Card
Updated on October 4, 2023
A Charge Card is a type of financial instrument that enables you to make purchases and payments without using cash or writing checks. It’s quite similar to a credit card but with a few key differences.
Key details of Charge Card
Payment Mechanism – A Charge Card works as a convenient method for paying for goods and services; when you use it, the card issuer covers the cost, and you must repay the full amount by a specific due date.
No Revolving Credit – Unlike credit cards, Charge Cards don’t allow carrying over balances between billing cycles, requiring you to clear the entire balance every month.
No Preset Spending Limit – Charge Cards often lack fixed spending limits, but your spending capacity depends on factors like credit history, income, and payment habits.
Timely Repayment – With a Charge Card, you must pay off the full balance each month, encouraging disciplined financial management within your means.
Fees and Rewards – Charge Cards may have an annual fee, which covers services like rewards programs, travel perks, and concierge services.
Targeting High-Income Individuals – Charge Cards are typically aimed at those with higher incomes and strong credit histories, as the requirement to clear the entire balance necessitates financial stability.
