Charge cards vs. credit cards: What's the difference?

Charge cards vs. credit cards: What's the difference?

author: Bryony Pearce

By Bryony Pearce


As with everything in life, there are both pros and cons for credit cards and charge cards. And, throughout this blog, we’ll explore what they are.

When it comes to credit cards and charge cards, there are a number of important differences you’ll need to be aware of. If you’re deliberating which is best for you, then don’t go anywhere, because we’ll be taking a deep dive into each within this blog.

What is a charge card?

Charge cards, similar to credit cards, allow you to purchase products or services on a card. However, unlike credit cards, charge cards don’t come with a credit facility. Because of this, you won’t be able to stagger repayments like you would with a credit card; instead, you’ll have to repay what you’ve spent in full at the end of each month.

Charge card pros

No limit

Now this one’s both a pro and a con, but we’ll focus on the advantages for now. As we just touched on, charge cards don’t come with a credit facility, which means there’s no spending limit. This might make it a cost-effective option if you’re looking to make high-value purchases – but you’ll need to be absolutely confident you can afford to pay it back.

No interest

Because you repay what you’ve spent at the end of the month with a charge card, they don’t come with any interest. Providing you meet the monthly repayment, this means you won’t be stung by interest charges on top of what you’ve spent.


You might find that some charge cards offer some additional extras, like concierge services, travel insurance, access to airport lounges and the ability to build up reward points.

Charge card cons

No limit

As mentioned before, due to there being no credit facility with charge cards, you’re free to spend as much as you want. So, if you’re not careful with your spending, you could find yourself spending more than you can afford.

Late payment fees

If you fail to repay what you’ve spent at the end of the month, you could run the risk of being stung by late payment charges and fees. Some providers may cancel your card on your behalf.

If you’re looking to take out a charge card, it’s really important that you check out how much these will be before deciding on your provider. Why? Because even if you’re confident you won’t be affected by the charges or fees, anything can happen – so it’s important to know that what they are and whether you’ll be able to afford them should you need to.

Extra costs

Firstly, you may be charged a fee each time you want to withdraw money from an ATM with your charge card. Secondly, charge cards could come with an annual fee attached – some providers charging as much as £450.

Less protection

While purchases made on a charge card are covered by a scheme known as chargeback, they aren’t covered by Section 75 or 75A of the Consumer Credit Act.   To benefit from chargeback protection, the transaction must have amounted to more than £10, and you must claim your refund within 120 days of discovering the problem or fault.


What is a credit card?

Credit cards come with a set limit, and the limit you’re given will depend on things like your credit history, employment status and income. Although some might come with a limited time only interest-free period, credit cards usually come with an interest rate attached to them.

Credit card pros

Less temptation

Credit cards come with a limit set based on personal criteria, so there’s less temptation to spend more than you can afford.

Less urgency

Because credit cards do have a credit facility, you’re not required to repay the entire sum at the end of the month. Instead, you have the option to repay what you can afford each month – just as long as you pay more than the minimum monthly payments.

Added security

Unlike charge cards, Section 75 and 75A come part and parcel with credit cards. With these, you’ve got the peace of mind that any purchases between £100 and £62,260 may be refunded if something goes wrong – like if the item you bought is faulty, or the business goes bust – providing you meet the qualifying criteria.

Free borrowing

Although credit cards come with an interest rate attached to them, there are a couple of ways they could be a free form of borrowing:

  • If your card has a 0% interest period, clear your balance before this ends
  • Pay your balance off in full at the end of every month thereafter.

Earn while you spend

Similar to charge cards, many credit cards providers offer incentives, like cashback, air miles and loyalty points.

Credit card cons

Interest soon adds up

If you don’t repay your debt on time and in full each month, you’ll be charged interest on your outstanding balance, and this interest can soon add up. To reduce the amount of interest you’re charged, it’s important to shop around before choosing your credit card provider, so you can find the best interest rate on offer.

Hidden costs

There are a number of hidden costs associated with credit cards, such as late or missed payment charges, additional interest that may apply, penalties for exceeding your credit limit, and cash withdrawal fees.

Which one should you choose?

Hopefully, this blog has helped you understand what exactly charge cards and credit cards are, and the pros and cons each carry. Deciding which one is right for you will depend entirely on your circumstances and spending habits, but, with either, it’s always important to only spend what you can afford.


Disclaimer: All information and links are correct at the time of publishing.

author: Bryony Pearce

By Bryony Pearce

Charge cards vs. credit cards: What's the difference? Charge cards vs. credit cards: What's the difference?