Credit cards and charge cards are often considered interchangeable. They look the same in your wallet and both let you swipe and walk away with your goodies with ease. However, charge cards are very different from credit cards and are harder to come by. According to, American Express is the only major company issuing personal charge cards these days.

Credit Cards

Think of credit cards as small loans. You apply with a lender and receive a set spending limit if you're approved. You can then charge to your heart’s content up to the limit on your card. Your creditor sends a bill each month with a minimum payment, including a finance charge on the outstanding balance based on your interest rate. While you don't have to pay the full balance by the bill's due date, you should pay as much as you can to keep out of debt.

Charge Cards

Charge cards are similar to credit cards, but with one major difference. As with a credit card, you apply for it and use it to make purchases or pay bills. However, at the end of your billing cycle you receive a bill for the total amount you charged and that amount is owed by the due date. In other words, charge cards do not let you roll over any of your balance to the next billing cycle. You must pay it in full or face a late charge.

Card Approval

Charge cards are usually harder to get than credit cards. They do not come with a set spending limit per se, although the issues can cap your buying limit if it chooses to do so. For example, you shouldn’t expect to buy a new car with a charge card. In addition, charge cards require excellent credit and a high income level. They are aimed at consumers who have the ability to spend large sums of cash. Credit cards, on the other hand, are aimed at consumers who want to buy now and pay later.

Debt Management

While both options offer the buy-now-pay-later option, charge cards make it harder to rack up debt because you have to pay back the full balance at the end of each billing cycle. Credit cards are loans you pay back over time and many come with an annual fee for usage. Credit cards could cost you significantly more in the long run, with finance charges compounding each month. Whether you use a charge card or a credit card, paying down your debt each month is the smart way to go.