Charge Card Or Credit Card?

dranzer01

What is better?

And consequently in relation to American Express...?

On a layman term, charge card you pay every penny back in full, and the company makes its money on a monthly or yearly fee - compared to interest rated credit cards....

eskbanker

'Better' is a matter of subjective opinion and depends how you'd want to use them, but personally I appreciate credit card features such as Section 75 protection, and those who wish to defer repayment (sometimes at 0%, sometimes for lengthy periods) will prefer credit cards.

A flip-side of this is that credit cards can give a false sense of security and lead to debt issues that wouldn't occur with a charge card.

Ben8282

It's more a question of what is best FOR YOU.
Only consider a charge card if you know that you will be able to repay in full EVERY MONTH WITHOUT FAIL.
A charge card, once you have established a payment history, will enable you to spend more or less whatever you want (within reason) each month without worrying about credit limits or using up your available credit. For example, if all credit cards were full to their limits you could continue to spend and repay on the charge card. You can get good rewards but there will be a fee, sometimes a very high fee, depending on which card you choose. The time to pay will also be shorter you will not get a full 56 days.
Charge cards can be useful for employer reimbursed travel and entertainment expenses enabling you to spend without compromising your personal credit limits.
You mention credit card interest but that is not an issue here. If you are considering using a charge card then presumably you pay your credit cards in full every month anyway so will not be paying interest.

phillw

dranzer01 wrote: »

On a layman term, charge card you pay every penny back in full, and the company makes its money on a monthly or yearly fee - compared to interest rated credit cards....

Credit card and charge cards make money every time you use them.
Some credit card and charge cards have a fee.
If you don't pay the full balance then a credit card or charge card will charge interest.
If you don't pay the minimum payment then credit card and charge cards will add a fee.

The main difference is the minimum payment calculation, a credit card is a small percentage of the entire balance while the charge card is the entire balance. Neither will mind you paying a fee occasionally, but both will cancel the card if you repeatedly do it.

The interest rates and fees are structured slightly differently to take into account the different usage & how much money they want to make, but this happens with credit cards as well.

Jasonh2015

I would suspect Amex would cancel your card if you default and charge you. And if you are defaulting on a charge card you really shouldn't have one.

Yawn

I have both. I'm considerably more nervous about the charge card, because I'm always worried I might forget and miss a payment (whereas with a credit card, there is always the direct debit for the minimum payment set up). But on the bright side, no credit limit to worry about.

In other words, as said above already, it really depends on you and your personality.

Ben8282

Yawn wrote: »

I have both. I'm considerably more nervous about the charge card, because I'm always worried I might forget and miss a payment (whereas with a credit card, there is always the direct debit for the minimum payment set up). But on the bright side, no credit limit to worry about.

In other words, as said above already, it really depends on you and your personality.

Perhaps you are not aware of this, but it is possible to set up a direct debit for the charge card. In fact AMEX prefer it.

dranzer01

Ben8282 wrote: »

Perhaps you are not aware of this, but it is possible to set up a direct debit for the charge card. In fact AMEX prefer it.

i was thinking the same thing

bolton_joe

Two completely different products for different purposes! Do you want a benefits package or to borrow money?