What is a Charge Card?

A charge card is essentially the same thing as a credit card; it is a revolving credit line that can be used for day-to-day purchases. Revolving credit lines have several features that make them excellent flexible financing options, but they can be expensive.

Flexibility of a Charge Card

With a charge card, you can spend up to your limits at any given point. It doesn't matter if you spend the entire sum on one item or one hundred items. You do not have to pay down the balance at any given point, meaning you can choose how much to repay each month. Your only responsibility is to stay within your limits and make a minimum monthly payment. 

Charge Card Expense

Despite the many great features of revolving credit, the main drawback is the expense. Interest rates tend to be higher on these loans than on installment loans. The interest can also compound month to month if you do not pay down your balance. Charge cards are an easy way to slip into a lot of debt without knowing how much the loan will cost up front. You will only see maximum benefits if you are a responsible user of your charge cards and pay down balances regularly.

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