Charge card vs credit card – which one is for you?

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Even though similar in name, charge card and credit card actually mean something entirely different. They both let you purchase things over your budget but have some critical differences in the way you are obliged to pay off the loan. In general, a charge card would have to be paid in full by the end of the month, while a credit card lets you divide payments into smaller parts defined by monthly minimum payment.

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The Overview of key differences between charge cards and credit cards

If you wonder how different types of cards are and which one is for you, read on, and we will help you choose. In this article, we will discuss some of the most important aspects of both charge and credit cards, such as:

  • Key differences in detail
  • Pros and cons of charge cards
  • Pros and cons of credit cards
  • How can you get a card?
  • Alternative for traditional banking

Learn about the perks of charge and credit cards, and by the end of this article, you will be able to make a conscious choice.

It is all about the differences.

A few crucial aspects are distinguishing those two types of cards. From the amount of money you can borrow to the availability – each card is completely different. We will get to the bottom of every key difference to help you with your dilemma. We will cover all of the basic features you need to know about to make a perfect choice for yourself. The more you know, the more suited to your needs card is.

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In contrast to credit cards, there are not a lot of charge card issuers. These types of cards became more of a rarity and very difficult to get. The Centurion® Card from American Express is one of the last proper charge cards. However, the requirements for this particular charge card are stringent and defined. You have to spend at least 250,000$ a year and be personally issued an invitation to apply for The Centurion® Card. There is also a unique form of a charge card, entirely destined for gas purchases.

Credit cards come in a much wider variety (Visa, MasterCard, Discover), with different annual fees, rewards cards, and cash-backs.

Acceptance rates

As a cardholder, you expect your card to be accepted wherever you pay. American Express ensures that 99% of vendors accept their credit cards, while there still might be issues with international acceptance for charge cards. There might be additional transaction fees and payments. Gas station charge cards can only be accepted in predefined gas station companies.


The end of a billing cycle can be a difficult moment for many people. Taking this into account will have a considerable impact on your decision. When one-time loan repayment can be a significant problem, it makes sense to consider a credit card. Only a minimum monthly payment, usually around 2% of the entire balance, is required with credit cards. However, keep in mind that late payments will result in late payment fees charged by a credit card issuer.

Credit cards come with something called Annual Percentage Rate. APR defines credit card interest rates on your monthly installments and lets you revolve your loans.

There is no such thing as dividing the borrowed amount into smaller, monthly payments when it comes to charge cards. One-time payment is the only solution to pay off your loan. There is no such thing as of late fees – not paying on time leads to damaging your credit score and reporting it to the credit bureaus.


One of the characteristics of the charge cards is their high annual fee. On the contrary, credit cards come in such a variety that they rarely have high annual fees or any annual fees whatsoever.

Credit score

One of the most significant and crucial differences between a credit card and a charge card is the needed credit score. In order to obtain a charge card, you must have excellent credit (or at least a good credit score). In contrast, with a credit card, there is much less probability that credit card companies would review your credit history or deny it due to a bad credit score.

Credit utilization

A credit card has a set spending limit. The percentage of that limit that you utilize (known as credit usage or available credit) accounts for roughly 30% of your FICO credit score. Approaching your credit card’s limit will almost certainly lower your score.

Due to the fact that the charge card has an unpublished spending limit, using it won’t affect your credit utilization. Your charge card balance is entirely excluded from the scoring.

Credit limits

Keep in mind that credit cards come with a preset spending limit. Spending above your spending limit is simply impossible.

A different approach is used with a charge card. Your spending limit is not being predefined. The charge card issuer adjusts your spending limit up to your previous credit reports. However, it is not equal to unlimited spending. The maximum amount is being defined by the entirety of your creditworthiness, credit history, and previous spendings.

Credit requirements

As previously mentioned, credit cards are available from banks for all credit levels, from terrible to excellent. There are credit cards for students with no credit history and high-end travel rewards cards for those with a long history of responsible money management. Depending on the applicant’s credit history, fees, credit limits, bonuses, and incentives can vary significantly from one card to the next.

To qualify for a charge card, you usually need to have excellent credit. Before applying, you should have a FICO score of at least 760. However, there is a possibility to be authorized with lower scores. Charge card providers want to ensure you have an appropriate payment history and stable financial situation, enabling you to pay off what you spend each month (because charge cards allow for massive purchases).

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Pros and Cons of charge cards


No debt

Charge cards require paying off the entire amount of borrowed money at the end of every billing cycle. That way, you are less likely to fall into debt. Financial institutions supervise and control your spendings so that you can never spend more than you can pay back.

Motivation to pay off

With no debt aspect comes the motivation to pay off. Unlike credit cards, charge cards require paying the entire balance at once. In a situation when the preset period passed and you still did not make a payment – you are obligated to pay interest on your loan. Usually, it is an extraordinarily high late fee. It is simply not worth avoiding or late paying off borrowed money.

No spending limit

Well, we cannot give you the warranty that it will be like that in your case, but charge cards give you enormous flexibility in terms of pricy purchasing. Your spending limit before each transaction will be reviewed and approved (sometimes declined) by a charge card issuer. But overall, charge cards give you much more financial freedom and flexibility than a debit card, credit card, or any other type of card.


Expense tracking

With the ability to make more significant purchases comes a more considerable responsibility as well. Charge card users have to make sure that they can pay off the entire balance at the end of every billing cycle. It requires extensive control over your spendings and making sure you will have enough to cover the loan.

No fee-free options

Unlike typical cards, charge cards do not ever come with no annual fee. There are also fewer rewards cards for tourists, restaurants, and so on. Keep that in mind and take it into consideration while choosing the most appropriate type of card for yourself.

Pros and cons of credit cards

Traditional credit cards come with a variety of advantages. However, you should look out for a few downsides when choosing a [blank] card.

We present you a list of credit card’s pros and cons below:



While charge cards are not so popular and not so many card issuers have this type of card on offer, credit cards are ubiquitous and available in almost every bank. They allow you to make purchases over your financial capability and pay off the balance in monthly installments. It speeds up financing your needs and, when spread out over few months, the installments do not hurt your budget that much.

What is more, many credit cards come with no interest charges whatsoever. That means you pay back only the amount you borrowed – as long as you make the monthly minimum payments on time. Another option is to use a balance transfer credit card. It allows you to diminish interest rates, and therefore, reduce your debt.


Credit cards come with a number of extras, rewards, and features. One of the main advantages of credit cards is purchase protection. Whether the product is damaged, entirely different, or simply not delivered – you can contact your credit cards issuer and claim your money back.

When it comes to rewarding, credit cards usually come with cash back or other rewards for shopping, travel, or hobby points. You can cut down your everyday expenses by simply paying with your credit card.

Credit score (both pro and con)

Using a credit card may lead to improving your credit score. However, it is only the case when using it responsibly. You have to be able to pay your monthly installments on time and, in the long run, will be rewarded with a much better credit score.

Unfortunately, it works the other way round as well. Late payments, or even worse, no payments at all, will inevitably result in a damaged credit rating. It may cause future issues with getting another credit or no ability to get credit at all.

You have to be extremely careful. Frivolous spending can result in you falling into endless debt. Piled-up debt causes lousy credit rating, and therefore high-interest rates. Make sure you keep track of your expenses and plan them responsibly.


Extra fees

Check the Annual Percentage Rate to be informed of all the costs associated with your credit card. Many people are unaware that their credit card issuer has the authority to charge you additional fees for specific features or transactions. Some credit cards include yearly fees, while others have late payment costs. When switching a balance on a balance transfer card, there may be additional fees.

Limited use

Another downside of credit cards is that they can only be used in certain situations. Many credit card companies will charge you a fee if you use your card to withdraw cash from an ATM or make an international payment.

The balance of both disadvantages and advantages, of charge cards and credit cards, will allow you to pick the best-suited option. Make a list of your requirements and goals to responsibly and reasonably decide which type of card is for you.

Here, at Wealth Nation, we support financial education and encourage you to broaden your horizons. Read on and learn about the alternative to the traditional way of banking.

Own your finances

It is easy to get stuck in a cycle of borrowing and spending money. Both charge cards and credit cards give you more considerable spending power than your personal finances would. However, you can quickly lose yourself with overspending and borrowing money to pay off previous loans.

Lots of banks have very high-interest rates and make you give back a significantly higher amount of money than you borrowed in a strictly defined installment plan. It affects your credit scores, bank balance, and mental health. That is why we would like to introduce you to the idea that will give you financial freedom and ease of mind – The Infinite Banking Concept.

Infinite banking allows you to imitate how a traditional bank operates and borrows money, but without the need to depend on a third party. You will be both a creditor and a lender.

Instead of borrowing from a bank, you borrow money against yourself, and single handedly dictate cash flow while still allowing your whole life insurance policy to earn dividends (money) even though you are using that money elsewhere. In other words, you build wealth while borrowing and repaying the money held in the cash value of your permanent life insurance policy.

One of the most significant advantages of the whole life insurance policy is that you will never have to deal with banking fees or interest rates on loans. As a policyholder, you can borrow money using your own policy’s cash value. Using this borrowing setup, you would never have to borrow money from a bank again and instead would borrow for yourself (your whole life insurance policy) and pay yourself back over time. Thus, being your own bank.

The goal of Infinite banking is to duplicate the process as much as possible to build the value of your own bank. The duplication process happens by lending and repayment of money typically held in the cash value of a permanent life insurance policy.

Infinite banking allows you to better work towards your individual and unique financial goals for yourself and your family and have control over your finances without dealing with banking fees or interest rates on loans.

Infinite Banking involves:

  1. Overfunding (with after-tax funds) a high cash value whole life insurance policy from a life insurance company
  2. Accumulation of Cash Value(tax-free) throughout the years you are a policyholder of your Whole Life insurance policy
  3. Tax-Free Loans taken out against your whole life insurance policy’s cash value to use for your financial expenses.

By the process of borrowing for yourself, repaying, and so on – simply by being your own bank, you earn the financial freedom and control of your money.

Implementing this banking strategy into your life gives you much better control over your finances and helps you build wealth using the life insurance policy.

Your financial life and choices do not have to revolve around traditional banking. Choose monetary freedom and never depend on banks’ good will again. Be your own banker and set your own monthly payments and due dates. Borrow money from yourself without affecting your credit score and high-interest charges.

Which card is for you?

Unfortunately, we cannot tell you which card is better for you and which one you should pick. Your newly gained knowledge and predefined goals will make the decision significantly more conscious and appropriate. Focus on your needs and requirements in order to come to the best conclusions and pick the best credit card or charge card.

In addition, we hope that finding out about The Infinite Banking Concept made you more curious about the alternatives to traditional banking and willing to learn how to become your own banker.