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What is the difference between a "charge" card and a "credit" card?

 

A charge card is different than a credit card.

A charge card is a type of credit card. When you take a charge card you agree to pay off the balance in full each month when you receive your statement. There are no interest percentage rates posted since the company does not expect you to carry over the balance into another 30 day period.

That is the big difference. A credit card allows you to carry over most of your balance without penalties. You 

must pay interest on the carry over, of course. Credit card company are very happy when you carry over the balance. In fact they encourage you not to pay much since there is always the option to pay the minimum that is a very small amount compared to the whole amount.

Ironically, if you have a charge card your credit score may be reduced. Why? Because a large factor in determining your score is the amount you have borrowed versus the amount of credit you have. If you have no limit, as American Express does on its charge card, then your score will drop.

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