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Charge cards work in a similar way to credit cards, with the bank paying for the purchases you make and then billing you at the end of the statement cycle. But there are also some key differences between charge cards and credit cards, including your payment requirements and the eligibility criteria. Read on to find out how a charge card works and whether it's the right option for you.
Offer ends 24 March 2021
Eligibility criteria, terms and conditions, fees and charges apply
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Charge cards have no set spending limit and require that you pay your full balance off by the statement due date, which is usually at the end of the month. A charge card is not a revolving line of credit and doesn't charge an interest rate like traditional credit cards. Instead, you will be charged a late fee if you don't pay on time. The structure and payment requirements of charge cards also means that they tend to have higher minimum income and credit history requirements than some credit cards. Charge cards often come with benefits like rewards points, travel insurance, airport lounge access, concierge services and purchase and fraud protection.
*The credit card offers on this page are chosen from a range of credit cards available to us and are not representative of all the products available in the market. The use of the terms "best" and "top" are not product ratings and are subject to our disclaimer. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.
Some cards are linked with a rewards program and can earn points per $1 spent on eligible transactions. Depending on the card, you can redeem these points for rewards including flights, travel packages, gift cards and more. These cards sometimes offer other travel perks including travel vouchers, airport lounge passes and perks with partnered hotels. Frequent flyer and rewards charge cards typically charge higher annual fees than other options.
Gold and platinum charge cards are designed to suit big spenders who are looking for premium perks. Depending on the card, you could get luxury rewards including fine dining, five-star hotels and travel benefits. You can spend with peace of mind and convenience thanks to complimentary insurance covers and platinum concierge services. These cards usually charge higher fees and are best suited to high-income earners.
You can use these charge cards to cover business costs, improve cash flow and manage employee spending. The right type of charge card will depend on the type of business you own. Business charge cards cater to small businesses whereas corporate charge cards are better suited to larger corporations. Similar to personal cards, some business charge cards also come with rewards programs, travel insurance and concierge access. Corporate charge cards may also offer features for tracking company and travel expenses, while also larger credit limits and more additional cardholders.
Make sure you consider the following factors when you compare charge cards so that you can find the right option for you.
Considering factors like card balance, interest rates and fees, you can compare credit cards and charge cards side-by-side below.
Feature | Charge cards | Credit cards |
---|---|---|
Card balance | Card balance must be paid in full each month. | Card balance can be carried indefinitely as long as 2-3% monthly minimum repayment is made. However, interest will be charged to any unpaid balance. |
Interest rate | No interest rate but a late fee penalty applies if the balance is not paid in full. | Interest fees apply for purchases and cash advances. |
Credit limit | No pre-set credit limit. | Fixed credit limit. |
Card fees | Annual fees and late payments apply. Cash advance, ATM and international transaction fees may also apply. | Annual fees are sometimes waived, but other fees such as ATM, cash advance and international transaction charges may apply. |
Eligibility requirements | High minimum income requirements. | Varying income depending on the type of card. |
Credit/ loan facility | Charge cards are suitable for spending in the short-term but are not loan facilities. | Credit cards support loan consolidation and allow you to spread repayments over an extended period. |
Applying for a charge card is simple and can be done online in a few minutes. The eligibility requirements vary between products, but some of the general criteria include:
Charge cards can be a useful way to free up your cashflow if you can pay your balance in full each month. If you prefer to carry a balance from month to month or don't think you'll meet the eligibility criteria, you may want to compare credit cards instead.
Although these cards don't have set credit limits, purchases are approved based on factors such as established spending patterns, credit score, repayment history and declared financial resources. As you establish a relationship with your charge card provider, the amount chargeable to your card should increase.
This is usually possible as long as the nominated family member satisfies the card provider’s requirements, such as being over 18 years of age. As the primary cardholder, you will be completely liable for all supplementary card spending.
Even though charge cards aren't technically "credit cards", applying for one will leave an enquiry on your credit report. Repayment history will also be reported to credit bureaus, so they can help you build your credit history.
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