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Charge cards and credit cards are commonly mistaken for the same type of product. Both have similar application processes, and you usually have hard pulls on your credit report when you apply. Additionally, charge cards and cards have similar physical card designs.
The primary difference between the two types of cards is the ability to carry a balance from month to month. A credit card allows debt to be paid over time with interest. But a charge card must be paid in full every month. If the balance on a charge card is not paid off, the account holder may quickly find that their card no longer works.
However, charge cards and credit cards also have important other differences. Let's take a look at what you need to know about the differences between a charge card and a credit card.
Page Contents
Charge Card vs. Credit Card: Key Differences
Credit limits
While credit cards have a set credit limit for how much you can spend on the card at one time, an advantage of charge cards is they usually do not have preset spending limits. No Preset Spending Limit means the amount you can spend adapts based on factors such as your purchase, payment, and credit history.
Charge cards are a great tool should the need to make a large purchase arise. They provide greater flexibility than a credit card with a designated credit limit. Charge cards also help you avoid reaching a credit card’s limit. With a traditional credit ard, approaching a credit card's limit will increase your “credit utilization” and negatively impact your overall credit score.
However, a lack of preset spending limits on charge cards does not equate to unlimited spending ability. The card issuer still sets limitations on your account based on variables like payment history, financial resources, and credit score.
Before attempting a large purchase, check online or call your charge card provider to confirm your current purchasing power. Additionally, remember that you must still pay the full balance according to the due dates set by the card issuer.
We always recommend paying balances in full each month, no matter which type of card you use. If you follow that guidance, there is not much difference in how you use a charge card versus a credit card.
Related: A Beginner's Guide to Building Healthy Credit
Interest rates
You can carry a balance on a credit card. However, you'll pay interest if you make only the minimum payment or pay less than the full balance that month. Even worse, credit card holders are charged both interest and late fees if the minimum payment is not met.
Interest rates are not an option on most charge cards, as you typically need to pay off the full balance each month. However, American Express offers the ability to “Pay Over Time” on cards like the American Express Platinum Card® and American Express® Gold Card. This enables cardmembers to pay for charges on these cards with interest over time or choose to pay their monthly balance in full.
- You may be eligible for as high as 175,000 Membership Rewards® points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you're approved and find out your exact welcome offer amount - all with no credit score impact. If you're approved and choose to accept the Card, your score may be impacted.
- Get more for your travels with 5X Membership Rewards® points on all flights and prepaid hotel bookings through American Express Travel®, including Fine Hotels + Resorts® and The Hotel Collection bookings. You earn 5X points on flights purchased directly from airlines or through American Express Travel® on up to $500,000 on these purchases per calendar year.
- More Value! With over 1,550 airport lounges - more than any other credit card company on the market* - enjoy the benefits of the Global Lounge Collection®, over $850 of annual value, with access to Centurion Lounges, 10 complimentary Delta Sky Club® visits when flying on an eligible Delta flight (subject to visit limitations), Priority Pass Select membership (enrollment required), and other select partner lounges. * As of 07/2025.
- More Value! $200 Uber Cash + $120 Uber One Credit: With the Platinum Card® you can receive $15 in Uber Cash each month plus a bonus $20 in December when you add your Platinum Card® to your Uber account to use on rides and orders in the U.S when you select an Amex Card for your transaction. Plus, when you use the Platinum Card® to pay for an auto-renewing Uber One membership, you can get up to $120 in statement credits each calendar year. Terms apply.
- More Value! $300 Digital Entertainment Credit: Get up to $25 in statement credits each month after you pay for eligible purchases with the Platinum Card® at participating partners. Enrollment required.
- More Value! $600 Hotel Credit: Get up to $300 in statement credits semi-annually on prepaid Fine Hotels + Resorts® or The Hotel Collection* bookings through American Express Travel® using the Platinum Card®. *The Hotel Collection requires a minimum two-night stay.
- New! $400 Resy Credit + Platinum Nights by Resy: When you use the Platinum Card® to pay at U.S. Resy restaurants and to make other eligible purchases through Resy, you can get up to $100 in statement credits each quarter with the $400 Resy Credit benefit. Plus, with Platinum Nights by Resy, you can get special access to reservations on select nights at participating in demand Resy restaurants with the Platinum Card®. Simply add your eligible Card to your Resy profile to book and discover Platinum Nights reservations near you, enrollment required.
- More Value! $209 CLEAR® Plus Credit: CLEAR® Plus helps get you to your gate faster by using unique facial attributes to verify you are you at 50+ airports nationwide. You can cover the cost of a CLEAR Plus Membership* with up to $209 in statement credits per calendar year after you pay for CLEAR Plus with the Platinum Card®. *Excluding any applicable taxes and fees. Subject to auto-renewal.
- $200 Airline Fee Credit: Select one qualifying airline and then receive up to $200 in statement credits per calendar year when incidental fees, such as checked bags and in-flight refreshments, are charged by the airline to the Platinum Card® Account*. American Express relies on airlines to submit the correct information on airline transactions to identify incidental fee purchases. If you do not see a credit for a qualifying incidental purchase on your eligible Card after 8 weeks, simply call the number on the back of your Card. Qualifying airlines are subject to change. See terms & conditions for more details.
- Start your vacation sooner, and keep it going longer. When you book Fine Hotels + Resorts® through American Express Travel®, enjoy noon check-in upon arrival, when available, and guaranteed 4PM check-out.
- New! $300 lululemon Credit: Enjoy up to $75 in statement credits each quarter when you use the Platinum Card® for eligible purchases at U.S. lululemon retail stores (excluding outlets) and lululemon.com. That's up to $300 in statement credits each calendar year. Enrollment required.
- $155 Walmart+ Credit: Receive a statement credit* for one monthly Walmart+ membership (subject to auto-renewal) after you pay for Walmart+ each month with the Platinum Card®. *Up to $12.95 plus applicable local sales tax. Plus Ups not eligible.
- $100 Saks Credit: Get up to $100 in statement credits annually for purchases at Saks Fifth Avenue or saks.com on the Platinum Card®. That's up to $50 in statement credits from January through June and up to $50 in statement credits from July through December. No minimum purchase required. Enrollment required.
- Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
- $895 annual fee.
- Terms Apply.
- Rates & Fees
- Earn 5X points for flights booked directly with airlines or with American Express Travel® (up to $500,000 in purchases per calendar year).
- Earn 5X points on prepaid hotels booked with American Express Travel®.
- Earn 5X points on Fine Hotels + Resorts® and The Hotel Collection bookings.
Note: Eligible charges can be included in a Pay Over Time balance, up to the Pay Over Time Limit. All charges not added to a Pay Over Time balance or monthly payment plan or Cash Advance balance must be paid in full each month by the payment due date. Pay Over Time only applies to eligible charges meeting minimum transaction amounts for certain cards.
Impact on your credit score
Credit scores are determined by multiple contributing factors — including your payment history, the average age of your credit, and your credit utilization. Credit utilization is the ratio of your outstanding debt to your total available credit. On a credit card, your credit utilization equals your current balance divided by the card's credit limit.
However, charge card usage is not factored into credit scores. Why? Because charge cards do not have preset spending limits. As a result, credit bureaus cannot calculate a charge card's credit utilization since you can't divide by zero. You can spend as much as you want on a charge card without affecting your credit utilization factor and damaging your credit score.
Even though spending on a charge card does not impact your credit score, applying for a charge card, paying your charge card's balance, and how long you've had the account will. Like credit cards, credit bureaus track these data points on charge cards.
Late fees
Both credit cards and charge cards assess late fees. Credit cards charge interest on top of the late fee. However, late payments, missed payments, or payments that don't cover the full balance on charge cards will cause greater scrutiny on your accounts with the card issuer. This could mean reduced charging ability or even terminating your ability to make additional purchases.
Additionally, paying just the minimum amount on a credit card will help you avoid late fees — although you'll still have to pay interest if you don't pay your credit card balance in full. However, you'll likely be assessed a late payment fee if you don't pay your charge card's balance in full.
Annual fees
Credit card annual fees can range anywhere from zero to hundreds of dollars. On the other hand, most charge cards have an annual fee.
No-annual-fee charge cards are typically not worth applying for. This is because the perks offered by no-annual-fee credit cards are typically better than those found on no-annual-fee charge cards.
Card approval chances
The chances of being approved for a credit card or charge card differ more according to the actual product and bank, rather than a simple credit card versus charge card comparison. For example, new applicants and those building credit can apply rather easily — and with decent approval odds — for the Chase Freedom Rise®.
On the other hand, Barclays is well known for lower chances of approval on its cards — such as the AAdvantage® Aviator® Red World Elite Mastercard® — if you don't have established credit or a good credit score.
Because most charge cards are marketed at higher-end customers, approval chances are typically lower than most credit cards when considering those who don't have strong credit profiles. For example, American Express Platinum Card® will typically require applicants to have a good credit score.
Common Examples of Cards With No Preset Spending Limit
American Express Platinum Card® and American Express® Gold Card are two of American Express' most popular cards with no preset spending limit, meaning the amount you can spend adapts based on factors such as your purchase, payment, and credit history. You pay off the balance in full at the end of each billing cycle. This is unless you are enrolled in Pay Over Time with American Express. If you do not pay off your entire balance, American Express will charge a late fee Up to $40 (Rates & Fees) on the Platinum Card® and Up to $40 (Rates & Fees) on the Amex Gold.
But those aren't the only cards without preset spending limits. The American Express® Green Card and even business cards like American Express® Business Gold Card and The Business Platinum Card® from American Express fall into this category.
(This card is not available through AwardWallet)
- 3x Membership Rewards® on travel
- 3x Membership Rewards® at restaurants worldwide, including takeout and delivery in the U.S.
- 3x Membership Rewards® on transit including trains, buses, ferries, subways, and more
- 1x Membership Rewards® on other purchases
Other credit card providers offer cards without preset spending limits. Chase's Ink Business Premier® Credit Card and the Capital One Spark Cash Plus also have no preset spending limits. These charge cards do not have an option for paying a minimum amount; you must pay the balance every month.
Additionally, the late payment fees on these cards can be higher than what American Express charges. The Spark Cash Plus has a late payment fee of 2.99% of the unpaid portion.
- Earn a one-time cash bonus of $2,000 once you spend $30,000 in the first 3 months
- Earn an additional $2,000 cash bonus for every $500K spent during the first year. You can earn this bonus multiple times over the course of year 1!
- Earn unlimited 2% cash back on every purchase, everywhere-with no limits or category restrictions
- 2% Cash Back on every purchase. 5% Cash Back on hotels and rental cars booked through Capital One's travel booking site.
Bottom Line
While there are many similarities between credit cards and charge cards (those with no preset spending limits), there are some very important differences between the two. Those include what happens when you carry a balance — by not paying your entire bill that month — and how your spending can affect your credit score.
For rates and fees of the cards mentioned in this post, please visit the following links: American Express Platinum Card® (Rates & Fees), and American Express® Gold Card (Rates & Fees)
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