What are Charge Cards?


Charge cards are similar in many ways to credit cards in terms of how and where you can use them. They both offer buy now, pay later functionality, but there are also marked differences between them. Advantages of charge cards include the fact that there is no interest payable, but this is balanced by the fact that you have to pay off the balance in full each month; there is no scope to make just a partial payment, and you can't borrow for longer than a month. As charge cards are paid off in full each month, they do not technically have a credit limit (or to look at it the other way - their limit is unlimited!). However, you should remember that the card issuer will want to know that you can afford your spending, so you may have to provide proof of your financial means when you apply, e.g. certain income and/or credit rating. To offset this restriction, and the fact that most charge cards incur an annual fee, charge cards, unlike many credit cards, often come with 'perks' such as discounts on certain products (e.g. flights or travel insurance) or access to VIP airport lounges, which can seem very generous. Consider carefully whether the perks available to charge card holders are valuable enough to offset the limitation placed on these products when compared to other types of UK payment cards.

How do I get the Best Charge Card Offer?

A number of UK issuers offer charge cards, and the features and benefits of these cards vary greatly from card to card. The easiest place to compare cards, therefore, is through charge card comparison tables. Differentiating factors tend to be the type and level of the benefits that can be obtained and how relevant they are to you and your lifestyle. For each card, it’s a good idea to consider carefully whether or not you will use the perks available and to what extent, and then compare the benefit of these perks to the cost of the annual fee. For instance, if you are a frequent flyer, then access to a VIP Lounge may be very valuable to you. It’s also worth looking at the small print to ensure that you qualify for the rewards, as sometimes these are aligned to how much you spend per month on the card. Other things that can help you consider which card to apply for are how easily the card can be used abroad and what the fees are. Also, whilst charge cards do not apply interest to your balance, the fees can be relatively significant if you do not or cannot clear your balance in full each month.