Financial institutions offer many types of credit card to simplify online and offline purchases. They also provide you with a plethora of rewards and deals. Such cards may look similar on the surface as they give you instant access to additional funds. However, they differ vastly due to some key features. 

Additionally, there are other cards available in the market that do not have revolving credit like a credit card but provide you with similar facilities. These are charge cards. Here is a complete synopsis of their differences and which you should choose for your daily purchases. 

What is a Credit Card? 

To start, it is a type of card that gives you revolving credit. This means you get a fixed credit limit, and your limit goes down as you continue to use it. You get a bill at the end of the month or the billing cycle, which you can pay in full to restore your complete limit.

One distinct feature of this credit tool is that it allows partial payment. If you are short on funds, pay only 5% of the total billing amount, called minimum due, to continue using your card. The remaining balance gets pushed to the next month’s billing cycle. This way, you have a constant flow of funds available to meet your requirements.

What is a Charge Card? 

This is another type of card that allows you to borrow instant credit from the issuer. However, unlike credit cards, it does not have a pre-approved limit. Using this card, you can borrow money as required and use it without any restrictions. The condition is that you must pay the complete amount at the end of the month or the billing cycle. 

Thus, it does not have a concept of minimum payment, as you need to pay the full amount every time. This is the most convenient option if you make multiple monthly purchases and have the financial capacity to repay immediately. This is a more exclusive type of card offered to only limited customers. 

Differences Between These Cards 

Here is an overview of the differences to better understand how they work. 

• Availability

Anyone with a good credit history and steady income can apply for a credit card. In fact, you can also get a FD credit card (or a secured card against your FD investment) if you have a low score or no credit history. 

To get a charge card, a high credit score is mandatory. This is because there is a high risk of loss to the issuer as this card has no fixed credit limit. Therefore, only a handful of individuals can get approved for this card. 

• Credit Utilisation

Ideally, you should not use more than 30% of your total credit limit to maintain a good score. Thus, if you max out on your credit card, then it can lower your credit score until you’ve paid the amount back. Since there is no limit on charge cards, it doesn’t affect your utilisation ratio. 

• Fees and Charges 

Charge cards have annual fees and late payment charges but no interest rate, as you need to pay the balance in full every month. Credit cards, on the other hand, apply several fees and charges depending on the issuer. 

• Part Payment 

You can continue using your credit card by making a partial payment of your monthly bill. With charge cards, you have to pay the full bill every time or a late payment penalty applies. 

How to Choose Between Them 

Although charge cards are not available for everyone, you can apply for them with a good credit score. Having a credit card is a more suitable option to meet your day-to-day requirements for most shoppers or business owners. Choosing a charge card is only ideal if you have the financial stability to pay large bills and don’t want restrictions of a credit limit. 

If you decide to choose a credit card, prioritise one that gives you maximum reward points. You can redeem these points to get cashback, discounts, statement credit, or to shop for products directly. A rewarding option you can consider is the One Credit Card.

This smart metal credit card gives you guaranteed 5X reward points every month for your top two spending categories. However, you can redeem these points and use them for any other category without any restrictions or to get offers and discounts for your purchases. 
It comes with a full-stack mobile app where you can keep track of your points, transaction history, latest offers, and much more. Some other benefits of this card are no-cost EMI, no annual and joining fees, and an option to get a credit card against a fixed deposit. To get your hands on these types of credit cards, apply online now.