Though credit and charge cards can prove to be very useful particularly for small enterprises in the need to supplement cash flow and business purchases, yet it should not be forgotten that both are different.

Let us try and understand some of the major differences between a credit card and a charge card.

First and foremost, it must be understood that if one wants to avail of a charge card then he must have an excellent credit score whereas one can get credit cards even with a low credit score.

Charge card comes without a pre-set spending limit. This means that the buying capacity that the cardholder possesses can be adjusted with their use of the card. The card owner is also required to pay the full charge card balance every month. 

A credit card, on the other hand, gives the owner a set credit limit which means that the user knows the amount they can spend every month. Credit card owners are also not required to pay their full balance every month. Instead, they can carry their balance from one billing cycle to the next. However, a minimum payment is mandatory for each billing cycle and any unpaid balance at the end of the billing period incurs interest charges.

No interest is levied on the balance of charge cards because the card company won’t let the owner carry any balance beyond the grace period. However, the penalty would be steep in cases of default which might be a flat fee or a percentage of the balance as per the terms and conditions of the card.

Credit cards, however, always come with interest and in most cases with a high rate of interest. It would be interesting to note that interest rate can well be counted as one of the most important features of credit cards as it directly influences the amount one would be paying for carrying a balance on his credit card.

Charge cards, in most cases, come with greater rewards than credit cards. However, carrying a balance or making cash advances cannot be done with charge cards. One would need credit cards for making either of these transactions. It is important to understand that like a credit card one cannot use their charge card everywhere.

It can be summed up that charge cards can prove to be a great option for those who have robust and established credit score and who can pay off their spending in full, every month. Charge cards also come with good perks and also offer a good incentive. However, if you are on the lookout for a card with a greater flexibility credit card would be the best option for you.