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While often confused with
credit cards, a
charge card is something else entirely. A
credit card comes with a revolving
line of credit which requires the card holder
to make at least a
minimum payment every month that a balance on
the card exists. A charge card, on the other hand,
requires the entire balance to be paid in full
each month regardless of how large it is.
Credit cards are favored by most consumers because
they enable people to make purchases and pay them
off over time. Charge cards are favored by
organizations as a way of managing expenses
without creating debt.
Depending upon the card issuer, some
charge cards do not have a pre-determined
credit limit.
American Express is a good example. If you are
able to demonstrate that you have the financial
means to pay, and you make your payments on time
each month, and they never have a problem with
you, the sky is the limit for how much you can
charge.
Unlike credit cards, there is no
finance charge associated with the use of a
charge card since the balance is always paid in
full. Most charge card issuers make their money
from the annual cardholder fees and from the
transaction fees they charge merchants who accept
the card. |
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