Many consumers are often torn between credit cards or charge cards when trying to choose a credit card. There are advantages and disadvantages to both. A consumer should look at charge vs credit card offers very closely to get an idea of which type of card would work best for their needs. With so many different offers it can be overwhelming for the consumer. Here is some information to help with the decision making process.
The most obvious advantage to charge cards is the fact that they are easily accessed online and are more accessible than a physical card. Online credit cards allow cardholders to make purchases using credit offered by the issuing credit card company. This means that rather than directly using already existing money for each purchase, every purchase is marked on a credit card statement and is then paid back over a specified period of time. This payment schedule makes it easy for the cardholder to budget their spending and helps prevent impulse buying, which is often a problem with credit cards without a payback plan. The credit card company does not have to charge interest on any of the money borrowed which can be a good thing if you do not have too much available credit or a large amount to pay back quickly.
Charge cards often come with rewards or incentives. For instance, some credit cards offer a percentage off certain purchases or a discount at the store where the purchase is made. Some charge cards come with air miles or other types of travel rewards programs. Many charge cards also offer discounts at restaurants, movie theatres, and other businesses.
In addition to reward programs, many credit cards come with various features that make using them a useful financial experience. Many credit cards offer added benefits such as travel insurance coverage, extended cash advances, and airline ticket refunds. Some credit cards also provide protection from fraud. They may include trip cancellation insurance, trip interruption insurance, and emergency assistance insurance. The cost of these features may vary depending on the provider and the credit card provider offers.
The primary difference between credit cards and charge cards is the amount of interest that is applied to the outstanding balance. With a credit card, payments are generally made on a monthly basis which allows the consumer to pay off the balance in just a few months. When a purchase is made and no payment is received in a month, this credit card will be charged an extra fee. Credit cards usually have a lower credit score than credit cards and as such are a better option for those with less than perfect credit.
There are many factors that go into choosing a credit card. A consumer must make sure to compare and contrast the terms and conditions of the credit card, annual fees, and any other costs associated with the credit card before choosing one to use. All three factors should be taken into consideration before choosing between credit cards and charge cards because each credit card issuer has different charges and rates. It is important to understand the entire cost of the credit card before choosing a card because credit limit credit cards typically offer the lowest interest rate but credit card issuers often charge a yearly maintenance fee that can significantly increase the total annual cost of the credit card.