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  - Want more from your flexible friend? A charge card can offer a rewarding alternative to credit cards, providing you repay your balance each month.
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American Express

The Green Card
£60.00N/A
  • Virtually 1 point for every £1 spent
  • £60 anuual fee
  • Manage your card online
Details... 
American Express

The Platinum Card
£450.00N/A
  • Virtually 1 point for every £1 spent
  • High cash withdrawal charges at 3% (min £3)
  • At renewal you can use points to pay card fee
Details...
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On this page:

  1. What is a Charge Card?
  2. Who are they for?
  3. Advantages and disadvantages
  4. Charge cards vs. other cards

What is a Charge Card?

A charge card is like a credit card, in the sense that it lets you borrow money for purchases or by withdrawing cash. Unlike a credit card, however, you must clear this balance in full at the end of each month. Because of this, these cards can be useful if you don't want to get into debt, as you are discouraged from carrying balances over from one month to the next.

Charge cards don't advertise an interest rate, as you technically don't get charged interest. Instead, they will usually come with an annual fee, as well as a late payment charge if you don't manage to pay back what you've borrowed within the month. As with other credit cards, you will normally also face charges if you withdraw cash or use them abroad. All of these fees can be quite hefty.

Charge cards don't tend to have a credit limit, so it's up to you to spend within your means. They also come with a range of benefits, such as a reward scheme for spending or complimentary insurance.

If you use your charge card regularly and make the most of any benefits, it can be possible to get a greater value than the cost of the annual fee. Note that most charge cards in the UK are offered exclusively by American Express, so you may be limited in choice.

As with other credit cards, charge card issuers are authorised and regulated by the Financial Conduct Authority.

Who are they for?

Because of how charge cards work, they are usually aimed at higher earners and/or those with a very good history of managing credit. They require excellent credit scores, partly to make sure you can repay the balance every month and partly due to their limitless spending possibilities. Businesses may also use charge cards for their company accounts.

Advantages and disadvantages

There are a few obvious advantages to charge cards: they have no spending limits, they offer appealing rewards and they encourage you to pay off what you owe every month. Yet, while you won't get charged interest, you can still end up having to pay hefty penalty fees, and not paying off what you owe in full will also negatively impact your credit rating.

The main disadvantages are that they can't be used for long-term credit, that they can tempt you to spend too much due to a lack of spending limit, and that they can charge hefty penalty and annual fees which could negate any rewards you may get. As with any type of credit, it's important that you use it with caution.

Charge cards vs. other cards

As stated, charge cards are more suitable for those who can pay off the balance on their card every month without fail. A credit card is for those who can't or don't want to pay the balance off in full, although you would still be required to make at least the minimum payment each month.

So, if you have a large purchase coming up, a credit card may be a smarter bet as you will have more than a month to repay what you borrow. If you get a 0% purchase credit card - provided you are disciplined - you can spread the payments without being charged interest.

However, if you'd prefer not to have the worry about getting into debt, a charge card can be a good alternative to a credit card. Remember though that without a credit limit, you will need to monitor your spending to make sure you don't spend too much or constantly end up living a month ahead of your wages.

Alternatively, if you don't have a decent credit score, you may want to consider a prepaid card instead. These work much like credit cards, but only allow you to spend the amount of money that you yourself put on them. This means there's no repaying a balance and no penalty charges, though there may be other fees to pay.

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