Though credit cards and charge cards may look similar, there are some big differences between them.
A credit card allows you to borrow money up to a pre-determined credit limit. You will either not be allowed to exceed that limit or, if you opt in, transactions that push you over your limit will be allowed and you will be assessed an over-limit fee. You can pay your entire bill when it arrives and avoid paying finance charges, or you can choose to pay just a portion of the balance and pay interest on the rest. Mastercard, Visa and Discover are the three major credit card types.
Like credit cards, charge cards allow you to postpone payment on your purchases, but for a much shorter period—you must pay the entire balance each month. Charge cards typically assess an annual fee, but may offer other benefits not available with a credit card. American Express is the most widely used charge card.
So, if you want the option to finance your purchases over time, then a credit card is the right choice. A charge card is the better choice if you want to avoid the risk of accumulating debt and you’re sure you won’t charge more than you can pay off each month.