What is a charge card?
A charge card looks like a credit card and works in a similar way, letting you buy what you want now and pay it off over a set period of time. They can also offer rewards and other perks.
But unlike credit cards, there's no interest charges and usually no pre-set spending limit (i.e. a credit limit). Instead, your spending patterns are considered and you need to pay total balance by the due date on each statement. This typically gives you a spending period of between 31 to 51 days before you need to pay off the account.
Charge cards vs credit cards
|Feature||Charge card||Credit card|
|Card balance||Must be paid in full by the statement due date (e.g. each month).||A balance can be carried from month-to-month, as long as a monthly minimum repayment is made. But interest will apply to the carried balance.|
|Interest||No interest is charged but a late fee applies if the balance is not paid on time.||Interest is typically charged when you carry a balance from month-to-month.|
|Credit limit||No pre-set credit limit.||Fixed credit limit.|
|Common card fees||Annual fees, late payment fees and international transaction fees. Other charges, such as for cash advances, may also apply.||Similar to charge cards. But some credit cards offer $0 annual fees in the first year or ongoing.|
- High minimum income requirements (e.g. $75,000 or $100,000 per year)
- Good credit history
- Minimum age of 18
- Usually need to be an Australian citizen or permanent resident
|Type of credit or loan facility||Charge cards offer a line of credit that is suitable for spending in the short term and needs to be repaid each month or statement period.|
Account details are added to your credit report.
|Credit cards allow you to pay off your balance over an extended period, which is known as a "revolving credit facility".|
Account details are also added to your credit report.
|Balance transfers||Charge cards don't offer balance transfers.||Most credit cards allow balances to be transferred from existing credit, charge or store cards and some accept balances from persona loans.|
|Rewards and other perks||A lot of charge cards offer frequent flyer or rewards points per $1 spent. Other perks include airport lounge passes, travel credit and complimentary insurance.||Rewards and frequent flyer credit cards also offer points per $1 and other perks such as airport lounge passes, travel credit and complimentary insurance.|
Charge cards and credit cards both offer lines of credit, as well as similar rewards and perks. But you won't pay interest on a charge card and need to pay it off completely each time you get a statement.
There is also a limited number of charge cards on the market in Australia, with have strict eligibility requirements. In comparison, you can find credit cards for a wider range of needs.
What does "no pre-set spending limit" mean?
Most charge cards don't have set credit limits that you need to stick to when you use them. Instead, purchases are approved based on factors including your spending patterns, credit score, repayment history and financial information that's available to the provider.
So, as you build up spending and payment history on a charge card, the amount you can spend may also increase, without the need to apply for a credit limit increase.
Types of charge cards in Australia
Business and corporate charge cards are more common than personal charge cards in Australia. According to the Finder database, there is just 1 personal card and over 15 business options currently available for new applications.
These cards can be compared across 3 major categories:
Rewards and frequent flyer cards
The range of charge cards in Australia includes accounts linked to American Express Membership Rewards, Qantas Business Rewards, Velocity Frequent Flyer and Diners Club Rewards. Keep in mind that Diners Club Rewards and Qantas Business Rewards are currently only available for business or corporate accounts.
💡Tip: Check point transfer options to open up more frequent flyer rewards or other options. For example, the American Express Platinum Card is one of the few personal cards that offers Qantas Point transfers.
Gold and platinum charge cards are suited for big spenders and high-income earners who want premium perks. This can include travel credit, airport lounge access, complimentary hotel loyalty status and fine dining offers. These cards also usually have higher fees than more basic charge cards.
Business and corporate charge cards
The flexibility of no pre-set spending limit is a key benefit of a charge card for business expenses, although providers typically have safeguards to prevent high-risk spending. These cards also offer other features for managing business and corporate spending, such as:
- Additional cards for employees
- Customisable account controls
- Complimentary insurance
- Detailed and itemised statements
- Summaries for GST (goods and services tax) and FBT (fringe benefits tax)
- Integration with accounting software (e.g. MYOB, Microsoft Excel)
Want a card for your business? Compare a wider range of credit card and charge card offers you can apply for now.
What to think about before getting a charge card
Charge card annual fees typically range from around $40 to $1,750. Some business cards also have additional cardholder fees.
As these cards don't have interest rates, this is the main ongoing cost to consider. But remember to also look at international transaction fees, late payment fees and other potential charges that could add to the overall cost.
Rewards points, lounge access, travel credit and other perks offered by charge cards can help you justify the annual fee. But you should consider how often you'll use these features to make sure it works for you.
Most charge cards in Australia are American Express options. A few are also Diners Club.
Both these types of cards are not as widely accepted as Mastercard or Visa and can lead to higher card payment fees. So it's worth checking acceptance before you apply to decide if a charge card is suited to your spending patterns.
You need to pay the total amount spent on a charge card by the due date on each statement. So if you don't think you'll be able to repay the account every 31-51 days, you may want to look at getting a credit card instead.
Charge cards typically have high income requirements and other eligibility criteria. As most of them are designed for business spending, you may also need to have an Australian Business Number (ABN) and business turnover details.
So make sure you check the criteria before you apply, or contact the provider to discuss your eligibility.
Frequently asked questions
What happens if you don't pay off a charge card?
High penalty fees may apply if you don't pay the full amount listed on your charge card's statement by the due date. The late payment details will also be added to your credit report, which could lower your credit score.
Depending on the charge card, there may also be other restrictions such as limiting how much you can spend. So if you don't think you'll be able to make a payment by the due date, contact the charge card company as soon as possible to discuss your options.
Can I get additional charge cards for my family or employees?
It depends on the card but you can usually get additional cards for employees with a business charge card. Some personal cards also offer additional cards for family members.
Keep in mind that any additional cardholders will need to meet the eligibility requirements. If it's a personal charge card, you will also be the only one legally responsible for managing the account. For business cards, you'll need to check the liability.
Do charge cards build credit?
Yes. Even though charge cards aren't technically "credit cards", applying for one will leave an inquiry 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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