Charge cards vs. Credit cards
Jennifer McClelland | RSS | 7 Comments
Charge cards let holders use them to make purchases, then at the end of the statement period, they are required to pay the balance, which is typically done on a monthly basis. There is no revolving credit (a balance can’t be carried from month to month and must be paid in full), there is also no pre-set limit.
With a charge card, you get all the security and convenience of a credit card, but without the risk of going into debt and without having to pay finance charges.
Charge cards also give some features that give consumers a bit of financial discipline when they are new to credit.
While late payments incur fees and charges, since there is no revolving credit, with a charge card, you don’t have to worry about APRs or finance charges. Business owners are also given extra rewards such as American Express’s “extended payment option” for equipment purchases or travel expenses. With this “reward”, finance charges are applied to balances associated with these transactions. They can also defer payment for 2 months.
So, why bother with a charge card? Being required to pay balances is a great incentive to keep spending in check while enjoying the convenience of plastic. But consider all features and your planned purposes before signing up for a new card.
Charge Card Summary
Essential features:
* No finance charges
* Balances must be paid monthly or every statement cycle
* No funds are automatically taken from bank account*
Typical features:
* No pre-defined spending limit
* Late charges billed for late payments*
Possible features
* No annual fee*
* Discounts on certain products or services*
* Specialized insurance (such as travel insurance)*
*These features may also be found in a credit card.
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Tags: equipment purchases, revolving credit, travel expenses
Steven from How to Lower Credit Card Debt | Fri, Nov 06 2009
Even though charge cards allow you to settle up at the end of the month the consumer still needs to monitor their purchases, as they can quickly escalate out of control. Personally, I prefer to use a debit card for all purchases since that truly helps to keep me in check!
monika from print designer toronto | Mon, Nov 09 2009
A credit card is a card entitling its holder to buy goods and services based on the holder’s promise to pay for these goods and services. Charge cards are different form credit cards, charge cards requires the balance to be paid in full each month.
Steven from white teeth | Fri, Dec 11 2009
This is very informative post for card holders actually I forgot to mention that I’m paying off a credit card with that $700. So, should I do a balance transfer or just pay?
Chris McClelland | Fri, Dec 11 2009
It depends on the APR, for example I just completely paid off Jen’s credit cards because the apr on them was higher(12%) then the APR on the mortgage(5.875%). This also applys if the APR you are paying is higher then the % that you could earn on an investment with the same money.
For example if you owed $1,000 at an APR of 19% you would have to be able to invest the same $1,000 and earn 19% or more(don’t forget this will be slightly higher because which tax bracket you are in, so you might have to earn 23%), if you can’t beat the 19% then it is better to just pay off the card.
carte sd | Sun, Dec 13 2009
I suggest that if you have excellent credit, have a strong policy of paying your balances back in full each month on your credit card, and travel a bit, it’s worth examining some of the charge card offers available to you, particularly if you’re running a small business. Where on the other hand, the biggest advantage of a credit card is the flexibility. You can make purchases without actually having the cash on hand at the moment. You also have an indefinite amount of time to pay back that money, though you do have to make a minimum payment each month on what you owe.
sleigh bed bedroom furniture | Mon, Dec 14 2009
I’m about to go into my second year of a B.S Computing & Information Technology degree but have no idea what I want to do after this degree. So I’m asking any recent graduates or even current undergraduates what they have done after university or plan to do after university with their IT degree?
Chris McClelland | Tue, Dec 15 2009
Well if you can’t find a job in your field you need to ask yourself what do you enjoy doing and try to center a temporary job around that, until you can get a suitable job. It is preferred if you temp job does provide you with some resume building referrals if possible.
For instance when Jen graduated from school she could not find work so she started working with me more, and used me as a reference. When people interviewed her they where impressed with what she was doing for me. She now works for a Bar & Grill Magazine in town here.