« Skyrocket Your Credit and Prosper | Main | Downward Spiral of Bad Credit »
June 29, 2007
Credit Cards vs. Charge Cards
What is the difference between a charge card and a credit card?
Many consumers often confuse the terms credit and charge card and think they are the same thing.
They are not the same.
Let's explain the difference between the two cards.
Charge Cards:
A charge card is a card such as the American Express Preferred Rewards Green Card which allows you to charge items to your card and pay later. There is NO revolving debt associated with a charge card.
What is revolving debt?
Revolving debt means that you do not have to pay your entire balance in full every month. You pay a portion of the amount owing plus interest
When I say that a charge card has no revolving debt it means that you MUST pay the entire amount owing each and every billing cycle.
Credit Cards
Credit cards allow for revolving debt and charge you interest.
When you strip away everything, a credit card is really a loan with a high interest rate.
There is more involved with credit cards which I describe throughout Crediteria.com, however I thought I should distinguish the difference between credit and charge cards.
Trackback Pings
TrackBack URL for this entry:
http://www.crediteria.com/cgi-bin/mt/mt-t.cgi/263