We often generically use the term ”credit card” to refer to cards that allow us to make purchases that we can pay for later. However, there are also charge cards (often referred to as hybrid cards, or cards with no preset spending limits).
Continue reading: Charge Card Vs. Credit Card: What’s The Difference?
Share your questions, experiences, and thoughts below.
so... can you at least name even a single charge card so people can figure out what it is?
@ eric licht -- I named several cards with no preset spending limit in the post, including all the Amex cards listed, plus the Venture X Business.
The consumer side comparison is almost useless and boring.
The interesting part that you should blog about is what happens differently behind the scenes at the banks and other places.
Think of it this in an avgeek terms.
To an average passenger flying Part 91 121 135 doesn't look different at all, it's flying.
That's charge vs credit to you.
But behind the scenes, wow.
I also viewed a card with no preset spending limit as one with a spending limit, but we won't tell you what it is. I, of course, will never be in a category where I'd have need of high limits.
“ For example, if you frequently make very large purchases that would be close to the credit limit on a traditional credit card, then you might be better off with a charge card. That’s because those purchases wouldn’t count toward your credit utilization.”
Assuming you pay off your balance at the end of the month
“A big purchase will max out my credit line and I won’t be able to buy anything else without an early payment (which may not be possible)” is a valid concern.
“A big purchase will drastically increase my credit utilization for a month and ding my credit score” is a concern for only the OCD folks who micromanage their credit scores, since once you pay off the balance (on time!) your credit score will pop right back to where it was.
I see, ok thanks. I guess the way it was written, the paragraph about those 5 cards doesn't read as if they are being highlighted as charge cards. It just talks about how they do not have spending limits, so maybe the connection just wasn't clear (like "these 5 cards are charge cards!").
@ eric licht -- Understood, my apologies. To be honest, the issue is that different card issuers have different ways that they name these kinds of cards. For example, Amex doesn't refer to any of these cards as charge cards, but rather as hybrid cards, or just as cards with no preset spending limits. But for all practical purposes, I'd consider them to be the same.
If you have good credit and enough income you can raise your credit card credit lines. It is possible to go over the credit line if you have an existing relationship with the financial institution and if you regularly pay with no problem. Generally charge cards may have some useful benefits but are not good in terms of everyday purchases for the loyalty or return.