Comparing an Online Charge Card to a Standard Charge Card

The term online charge card is often misunderstood. It can mean a number of different things: one, a card that is applied for online; two, a merchant or retailer that sells products online; or three, an online account for purchases. This third meaning is the one that is usually implied when a borrower is comparing an online charge card to a standard charge card. The main difference between the two is the fact an online account is used solely for online purchases.

Charge Card vs. Credit Card

The first distinction to make in this comparison is a charge card versus a credit card. Though the two terms are often used interchangeably, there can be one key difference. A "credit card" implies some type of revolving credit. This means the borrower can repay the sum owed at any time, and the balance can be carried month to month. Some charge cards are revolving, but others require a borrower to pay down a sum at the end of a billing cycle. A billing cycle is usually a month long. This means a borrower will get a bill in full for all charges made during a month to be repaid immediately. 

Standard vs. Online Charge Card

A standard charge card, like a standard credit card, is a piece of plastic with a number and a magnetic strip. The number is the actual account number of an individual. The magnetic strip holds the same information. This strip is recognized when a card is "swiped" through a credit card machine. The machine decodes the information and passes it along the electronic network of banks and charge card companies involved in the transaction.

An online charge card is not an actual piece of plastic, though you may receive a card for your personal information. The card cannot be "swiped" at retailers. Instead, it is just an account number to an online account. Some of these accounts offer credit, and others must be prepaid. One example of an online charge account is a PayPal account. This company, like many other processing companies, helps provide a secure way to make transactions without actually giving away personal bank account or credit card information online.

Who Needs an Online Charge Card?

For most consumers, a standard credit card or charge card is all that is necessary for routine transactions. There will be little benefit to having an additional online charge account. However, there are some people who will benefit from the security of an online account. These people include:

  • Business owners who make regular large purchases or sales online - If you operate a portion of your business online, then having an online charge account can help keep your funds safe and create a faster way to interact with your vendors and consumers.
  • People making international purchases - If you plan on buying goods overseas, particularly from countries where Internet connections may not be as secure, it is a good idea to use an online account instead of a personal bank account.
  • People without a credit card - If you cannot secure a credit card or charge card due to bad credit, an online account will be necessary to make transactions online.

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