What is a Charge Card? – Episode #41

How is a charge card different from a credit card?. A charge card must be paid off in full each month. A credit card can revolve its balance from month to month.

• American Express offers charge cards, credit cards and pre paid cards.
• VISA and MasterCard brands are only on credit cards, debit cards and pre-paid cards.

Probably the most well known charge card is the American Express Green Card. It was launched almost exactly 50 years ago on October 1, 1958. 250,000 cards were printed, on paper, at launch and become a big hit. The annual fee was $6 [Diner's Club which launched in 1950 had an annual fee of $5].

Charge cards are a nice way to build your credit score, because they have to be paid off each month.  They teach responsible use of plastic.  Be careful though, the plastic card business has become more complicated and American Express has dozens of products to choose from, some of which are charge cards and some of which are credit cards.  Make sure you read the fine print before you sign up.

With their flexible limits that some charge cards have, this can help build your credit score as you can show  responsible spending and payment for high amounts and those records can lead you to ask for higher limits on your credit cards.