Charge Cards List - Reviews and Benefits Explained
Charge Cards - What Are They?
When Diners Club and American Express first introduced their cards ages ago, they were charge cards and not credit cards. Charge cards are different from credit cards in that they do not extend credit to the cardholder. Hence cardholders have to pay in full (PIF) every month (though this has changed recently with American Express charge cards).
Charge Card FAQ
What is the difference between a charge card and a credit card? There are some differences between a charge card and a credit card.
1. A charge card does not extend credit to the cardholder whereas a regular credit card like a Visa or Mastercard does.
2. Because a charge card does not extend credit, by definition, you have to pay in full every month. A credit card does does not require that you pay in full every month. All that is required is that you pay the minimum balance. That is one of the ways credit card issuers make money from you (via extending credit and earning interest). Many charge cards these days have the option for users to pay for some purchases over time. American Express charge card customers, for example, can enroll in the Extended Payment Option and pay for purchases over $200 over time. They can also opt-for Sign & Travel to be able to pay for eligible travel-related expenses over time.
3. Charge card charges an annual fee whereas most regular credit cards have no annual fee (with the exception of some travel credit cards).
4. Charge cards normally come with a reward program. For American Express, you get the Membership Rewards. For Diners Club, you get Diner Club Rewards. Regular credit cards can either have rewards or not.
Are charge card benefits better than those of regular credit cards?
It all depends. Most of the benefits that are available to charge card holders and also available on regular credit cards. For example, travel accident insurance, extended warranties, purchase protection features can be found on both charge and credit cards.
Are there any different requirements if I want to apply for a charge card?
No. Requirements are no different when you apply for a charge card or credit card. Individual card issuers will assess your application, credit history and using proprietory methods, will determine whether you are approved for a card or not.
Why do charge cards have annual fee while most credit cards do not
There are three main ways that credit card issuers make money. The first is through annual fees. The second is through getting a small percentage when you use your card with a merchant. Lastly, credit card issuers make money when you carry a balance. Because charge card do not allow you to carry a balance, they normally charge an annual fee to compensate for not being able to make money on you carrying a balance.
Which is the best charge card? Today, there are only two main companies that issue charge card. They are American Express and Diners Club. Diners Club is now part of Citigroup. My preference would be the charge cards from American Express because I think there have a slightly better reward program (both reward programs are way ahead of other card issuers).
The American Expres® Preferred Rewards Gold Card was the very first credit card that I got 15 years ago. I have always paid my bills in full, though recently, Amex has got this extended pay option for any items that you buy above $200 or travel related items (ie you can pay over time like a regular credit card). What I really like about the card are the reward features and many other perks like Gold Card Events, Guaranteed Hotel Room Reservations that are simply not found on other cards. There is also a prestige associated with this card that is very hard for other cards to replicate.
About a couple of years ago, I upgraded to the Platinum Card® from American Express from the Gold Card. This was probably one of the best decisions that I have made. I have made use of all the travel features that it pays for the annual fee itself. This is a card that I would recommend.