What is a Charge Card?

Most people don’t realize that a charge card is NOT the same thing as credit card…

not a credit cardWhen talking about credit cards, you will rarely hear someone in their 20’s or 30’s call them “charge cards.” However the older generations will, why is that?

Because charge cards came first.

So what is a charge card and why is it different?

Charge Card Definition: A credit card which requirements payment in full each month. When your bill comes in the mail, you are required to pay it in full since a balance cannot be carried.

If you read up on the American Express company’s history you will get a refresher on their first card…

Launched in 1958, it came with a $6 annual fee – and yes – it required you to pay your bill in full each month.

It actually wasn’t until 1987 when AmEx started issuing credit cards (today those include the Blue Cash and Blue Sky cards). By definition, credit cards are accounts which give you the option to pay your balance over time instead of all at once.

Later on during the 60’s and 70’s there were actual credit cards being issued by other financial institutions such as Bank of America, Citi, and Chase. But during that time many people used the “charge card” name to describe all of the above, since they were accustomed to using that phrase.

So now you know what is a charge card… and what isn’t!

The charge cards of today

Over the past three to four decades, many banks have veered away from offering charge cards. Why? Well the intentions are quite transparent… they would rather you have the “convenience” of paying over time (and incurring interest charges in doing so).

As a result, there are hardly any charge cards left on the market today.

In the United States you will only find 2 companies which still issue charge cards to consumers:

American Express

AmEx Premier Rewards Gold CardEven though AmEx now issues credit cards, a good chunk of their business is still the charge card market. They are without a doubt the largest issuer.

Right now the American Express Gold Premier Rewards Gold Card is their most popular. It offers some distinct advantages:

  • High Rewards: You get 2x points on gas at US stand-alone gas stations, 2x points at US stand-alone supermarkets, 3x points on airlines, and 1x on all other purchases. These points have the potential to be quite valuable because you can convert them to over a dozen frequent flyer mileage programs.
  • Extra Benefits: There are too many to talk about so I won’t list them all here, but some of the more noteworthy include free roadside assistance (which is up to $200 value per year), free extended warranties, purchase protection, and more.
  • Better Service: This is a high-end premium charge card and you get service quality that matches.

To learn more check out the American Express Gold review.

In addition to the Gold series, AmEx offers a few other charge cards: Platinum, Green, and Zync (the latter of which you can no longer apply for).

Diners Club

Yes, the name is a bit old fashion and many people aren’t even aware they still exist… but they do! In some foreign countries Diners Club is still semi-popular. However here in the United States you almost never see them.

They launched their charge card in 1950 (8 years before AmEx) which means that Diners Club was actually the first charge card (if you aren’t counting store-only charge cards). Back in 2011 BMO (Bank of Montreal) purchased Diners Club USA.

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Michael Costas

Chase also offers a business charge card; the Ink Bold.