They’re not the same? Nope! And they affect you very differently if you apply for one without realizing. One can be horrific on your finances and credit for years if you make the wrong choice.

A charge card actually has to be paid in full every month. They are NOT revolving and recurring debt. You can’t carry over a balance to the next month or pay over time. American Express is the most widely used example of this—however, they have some hybrid features these days.

Remember when AMEX was seen as the upper echelon of credit cards and only rich people had them? There’s a reason. You have to make good money, have great credit, and they were always primarily a charge card; not a credit card. Fast forward to 2024, and we now have revolving accounts for most things these days. AMEX, has the OPTION of that called Pay as You Go. It kind of makes me giggle they even have a name for it let alone that one. Basically, you can either choose a charge card or credit card. I don’t know why they don’t just say that because a credit card is a pay as you go debt. Anyway….

Imagine you signed up for the Gold card and not knowing the difference just select charge card (because doesn’t Pay As You Go sound like a secured card aka prepaid?). You then go buy the expensive thing you wanted so you could finance it and get the miles over time. Until you get the statement and read to learn the entire balance is called due. What??? It almost sounds like we’re in the 80s again! Nope, this still exists and that’s why your grandparents often said charge card for their American Express and other cards. They are!

Credit cards we all know how they work and they report regularly to the credit bureaus your utilization, balance, limit, payment history, age of credit etc. A charge card reports differently and this is how it can also affect you (besides not paying it off at the end of the month because you thought it was a credit card) because they’re not even factored at all in many cases if you’re paying them so they don’t help you build credit—because they have no limit to gauge utilization and payment history. You are technically supposed to have a perfect history or you’re in default. Some charge card companies also don’t report all or any of your information unless you are behind, late, etc so you may not be seeing a rise in score how you thought you would. If you get behind or late, those will show guaranteed with a big drop and your card may be cancelled. For credit building, you need a revolving and recurring debt with at least a small balance carry over every month; that’s not allowed on a charge card so get a credit card like most are these days.

So when you hear a commercial state “with no preset spending limit” that’s a dead ringer for a charge card. Are they bad? Not at all—unless you suck at money management. 🤷‍♀️ Early in your credit journey though, stick with credit cards and remember AMEX charge cards require high income and credit for a reason. Otherwise, try Citibank.

So, they’re both fine but one is absolutely dangerous if you accidentally get one not knowing the difference and charge cards can wreak havoc on your life if you learn the hard way. Credit and finances will be ruined for years to come. NO CARD is meant for you to spend beyond your means or live lavishly. Ever. So don’t. If you’re smart with money and never charge what you can’t quickly pay off within 30 days, either works great. Otherwise, stay away 🙅🏼‍♀️.