What is a charge card?

A charge card differs from a regular credit card in that there is no pre-set credit limit. Certain credit card issuers, such as American Express and Diners Club, issue charge cards where the user is required to pay off the credit card balance in full every month.

A charge card issuer usually charges an annual fee from the credit card owner as well as from the merchants where the card is used. For example, every time the cardholder makes a purchase, the merchant pays a certain percentage to be able to accept the card as payment.

Charge cards typically require that the bill is paid in full every month and the user cannot carry a balance. There are usually no finance charges if the bill is paid on time.