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Charge Cards
If you are considering your credit options, a charge card, from the likes of Diners Club and American Express could be an alternative worth exploring. Charge cards are a variation of traditional credit cards and provide you with instant and accessible credit for shopping and lifestyle purposes.
Unlike a low rate credit card, with a charge card you don’t carry a debt month to month, while it is compulsory to pay off the total balance in full at the end of every month to avoid stiff penalties.
What are the benefits of a charge card?
Flexibility is the star attraction with a charge card. For example, many charge cards allow you to determine your own monthly limit, provided you can meet the repayments. This is an excellent feature, particularly for those with good financial discipline and a steady income.
However if you feel you don’t have sufficient self control, then you need to think long and hard before using a charge card. That said, a charge card lender will also require a good to excellent credit rating before handing over a plastic card.
Interest charges: Charge cards officially carry no interest charges, provided you can cover the debt. If you not meet the repayment deadline, the lender can cancel your charge card or slap you with significant penalty fees. Also with charge cards, there is an annual fee, which can be quite hefty, as well as cash advance charges.
Another potential hazard with charge cards is that they are not as widely accepted as credit cards by vendors – although the charge card providers are attempting to increase the acceptance of their cards globally.
Rewards: Charge cards offer similar, and in some cases even more expansive rewards than credit cards. Loyalty programs, complimentary insurance and exclusive travel and accommodation discounts are often packaged together to encourage charge card holders to beef up their spending.
Like any financial product, it is important that you understand the terms and conditions associated with a charge card. For more credit card information, visit RateCity's credit cards guide or compare credit cards online.
