What's Happening
14 minutes ago

Booking Enters Historically Strong Trading Window Ahead Of Earnings

benzingabenzinga.com
18 minutes ago

Lyft Q4 Earnings: Revenue Beat, Gross Bookings Up 15%, New Buyback — 'Our Biggest Competition Is Inertia'

benzingabenzinga.com
22 minutes ago

DoorDash Shares Climb After Solid Q4 Results: Total Orders Grew 19%, GOV Increased 21%

benzingabenzinga.com
27 minutes ago

Super Micro Reports Preliminary Q2 Earnings, Company Expects To File Delayed Reports In Coming Weeks

benzingabenzinga.com
28 minutes ago

Robinhood Q4 Earnings Preview: Can Company Rebound From Q3 Miss? Key Items To Watch

benzingabenzinga.com
30 minutes ago

$1000 Invested In United States Steel 5 Years Ago Would Be Worth This Much Today

benzingabenzinga.com
34 minutes ago

Upstart Shares Soar After Solid Q4 Report, Strong Q1 Guidance

benzingabenzinga.com
42 minutes ago

Interactive Strength Shares Are Trading Lower Today: What's Going On?

benzingabenzinga.com
54 minutes ago

12 Consumer Discretionary Stocks Moving In Tuesday's Pre-Market Session

benzingabenzinga.com
54 minutes ago

12 Health Care Stocks Moving In Tuesday's Pre-Market Session

benzingabenzinga.com
54 minutes ago

12 Industrials Stocks Moving In Tuesday's Pre-Market Session

benzingabenzinga.com
54 minutes ago

12 Information Technology Stocks Moving In Tuesday's Pre-Market Session

benzingabenzinga.com
59 minutes ago

A Glimpse Into The Expert Outlook On Fluence Energy Through 12 Analysts

benzingabenzinga.com
59 minutes ago

The Analyst Verdict: Praxis Precision Medicine In The Eyes Of 4 Experts

benzingabenzinga.com
60 minutes ago

Analyst Expectations For Allstate's Future

benzingabenzinga.com
60 minutes ago

What Analysts Are Saying About ZoomInfo Technologies Stock

benzingabenzinga.com
60 minutes ago

Ukraine Floats Land Swap With Russia As Trump Signals Peace Push

benzingabenzinga.com
60 minutes ago

Baker Hughes Stock: A Deep Dive Into Analyst Perspectives (18 Ratings)

benzingabenzinga.com
1 hour ago

Why Intel Stock Is Soaring Today

foolfool.com
1 hour ago

A Closer Look at Delta Air Lines's Options Market Dynamics

benzingabenzinga.com

3 Reasons Charge Cards Are Better Than Credit Cards

A man holds out a credit card

Image source: Getty Images

With most credit cards, you’re free to carry a balance from month to month. It’s usually not the best idea, as credit cards have high interest rates. But you have the option if you want.

Charge cards work differently. These are a type of credit card that are designed to be paid in full every month. While they aren’t too common, some of the most popular cards on the market are charge cards. Just like other credit cards, charge cards can offer lots of perks, including rewards and purchase protections.

I consider charge cards an even better option than credit cards. Here’s why.

1. They keep you out of debt

Credit card debt is a serious financial issue that affects millions of Americans. The average amount of credit card debt is $6,380, according to the credit bureau TransUnion. With average rates topping 20%, many consumers are paying well over $1,000 in interest every year.

The best way to use a credit card is to pay it off every month. If you do this, you can take advantage of all the benefits without the costly interest charges.

Since charge cards require that you pay in full, they essentially force you into good payment habits. There’s no temptation to spend more than you can afford and pay it back later, like there is with credit cards, because you don’t have that option.

If you’re in credit card debt, consider getting a card with a 0% intro APR on balance transfers. You’ll be able to transfer over your debt and pay it down interest free. It can help you get out of debt faster while avoiding interest charges. Click here to learn more and see our list of the best balance transfer cards.

2. They have flexible spending limits

When you’re approved for a credit card, the bank sets a credit limit based on your credit history and income. If you’re approved for a $3,000 limit, that’s the most you can spend with your card. The only way to spend more is to get a credit limit increase, which the bank may or may not be willing to approve.

But most charge cards have no pre-set spending limits. This doesn’t mean you can spend as much as you want. It just means the bank doesn’t set a fixed credit limit on your card. It will adjust how much you can spend based on your financial activity.

You’re not flying completely blind here. Banks typically offer a tool in your online account that you can use to check your spending power. You enter the amount you want to spend, and you’ll receive confirmation if it will be approved.

3. They don’t affect your credit utilization

Credit utilization is one of the main factors that determines your credit score — it’s worth 30% of your FICO® Score. Banks report your card balances and credit limits every month. That information is used to check how much of your credit you’re using. For example, if you have $7,000 in balances and $10,000 in credit limits, your credit utilization is 70%.

Charging too much on your credit cards is bad for your credit score, because it looks risky to lenders. A popular rule of thumb is to keep your credit utilization below 30%. If you have a $10,000 credit limit, you’d want to keep your balance below $3,000 at all times.

Because charge cards don’t have a credit limit, using them has no impact on your credit utilization. It’s one less factor you need to worry about regarding your credit score.

If you’ve just noticed that the credit card you want is actually a charge card, don’t let that deter you. This type of card can work out just as well or better for your finances. And when you use regular credit cards, it doesn’t hurt to use them like charge cards. Paying in full is a smart financial habit, whether your card requires it or not.

If you’re ready to see some of the best credit and charge cards, check out our list of the best card options here.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

Related Posts

Image source: Getty Images The best credit cards have a lot of perks — cash back, travel rewards, purchase protection, and more. But what happens

Social Security benefits for spouses are a common source of confusion. MassMutual reports that 25% of surveyed adults near retirement age were unaware that spouses

Image source: Getty Images Most people pay their credit card bill once a month, but you’re allowed to pay more frequently. Technically you can pay

The latest cover of Time magazine shows Elon Musk sitting at the historic Resolute Desk in the Oval Office with the U.S. flag and the