Charge cards are the predecessors of credit cards. When you have a charge card, the issuer does not charge interest on your balance, but you must pay off the balance in full as agreed when you signed up for the card – payments are usually once a month. Charge cards can save you money by essentially helping you to live within your means.
When charge cards were first introduced they were usually under the auspices of big retail merchants. That way a person could come in to the retail establishment and just charge what they needed, without needing to have any cash on them. The issuers of charge cards did not – and do not today – charge interest on the balance. At the end of your billing cycle, whatever that may be, you are obligated to pay off the balance on your charge card. Credit cards, by contrast, are revolving lines of credit that require you to make a minimum monthly payment on your balance, without ever having to pay off the principal in full as long as you make the minimum monthly payment.
Charge cards, as mentioned, do not charge interest on their balance. This can save a person a lot of money in and of itself. In fact, many people with credit cards rack up big expenses and their credit card balances grow. The interest charged can make it hard to pay off the debt. With a charge card, you’re paying off your balance every single billing period, thus eliminating any debt, and avoiding the threat of high interest rates altogether. Charge cards are a very reasonable alternative to credit cards. In fact, many financial advisors recommend that you treat your credit card like a charge card.