Yes, there are differences between credit cards and old-fashioned charge cards. Big differences, the main one being it’s extremely unlikely you’ll dig yourself into major debt using a charge card—hence a surge in charge cards’ popularity.
As the WSJ reports, charge cards—which absolutely must be paid off in full at every month, no balances allowed—have grown recent years, now accounting for 8% of all credit-card offers, up from just 2% a couple years ago.
Consumers (younger ones in particular) are attracted to charge cards such as the AmEx Zync because the no-balance stipulation helps them avoid getting into serious debt, and also because, unlike debit cards, there are no overdraft charges. With a charge card, you simply cannot spend more than your limit—which is a positive for today’s newly frugal consumer, though not long ago this would have been considered more of an inconvenience, something that’d hold you back in an era when few people wanted to deal with restrictions of any sort.
Before jumping on the charge card bandwagon and taking the scissors to your credit card, take note that charge cards can mess with your credit score, at least in the short run, and that charge cards come with their share of fees. Per the WSJ:
The AmEx Zync has a $25 annual fee. Chase waives the Ink Bold’s $95 annual fee for the first year…
There also are late fees. The AmEx Zync’s vary by state, but can be the higher of $35 or 2.99% of the delinquent balance. Chase’s charge-card late fees range from $15 to $39, depending on the size of the delinquent balance
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Then again, it’s becoming more typical for standard credit cards to charge these same kinds of fees, and more and more cards are expected to follow suit with all sorts of fees of their own, making the pay-off-in-full charge card an increasingly interesting alternative.
Read more:
Credit Card Upheaval: Time for You to Wake Up and Take Charge