The Charge Card

A Charge Card is a type of electronic plastic card, similar to a credit card. It offers most of the same benefits as a credit card, such as an interest-free period on purchases you make, but it does not have a pre-set spending limit. A charge card essentially allows an unlimited number of payments to be charged to the card. However, unlike a credit card the outstanding balance must be repaid in full at the end of the month. If you cannot repay the balance, there will be a penalty charge and interest will be charged on any unpaid amount. If you cannot pay the balance within a certain number of months, your charge card provider will typically close the account and request that you destroy your card.

Most charge cards offer reward schemes, including: cashback, loyalty points, discounts and gifts. Charge cards may also extend your interest-free credit period for certain purchases, such as flights or hotel bookings. However, in exchange for these benefits the card usually has an annual fee. In addition, you must be earning a certain amount before you can qualify for a charge card. Most charge card providers will reject your application if you have an imperfect credit rating.