Mar24
Merchant Charge Card or A Credit Card?
It is a common misconception that a charge card is the same things as a credit card. Charge cards are typically issued specifically by stores and merchants for exclusive use in their stores or by some groups who offer a card that allows you to “charge it” at a limited number of participating merchants. Typically, you have to pay off the balance every month, although some do allow you to pay your balance over a period of time. Charge cards do not equate to an extension of credit, though you do usually have to have a pretty good credit score to get one. Credit is similar to a cash loan, you have to pay it back with interest and fees, however, it can be used almost anywhere. Charge cards do not offer the ability to use them wherever you wish or to obtain cash advances and other company products, and while they sometimes come with the rewards and perks, they are not the same as those offered by many of today’s credit cards.
Charge Cards
While there are some charge cards that fit into a category that is neither store specific, nor really a credit card, for this particular discussion, the focus is on those cards issued through merchants themselves. The merchants issuing the cards typically have their own financial department or have partnered with a financial institution to issue the cards. The approval procedure is much like that of a credit card. Your credit will be checked and based on their terms and conditions, they will decide whether or not to issue a charge card to you.
A store charge card limits you to purchases at a particular store and its branch merchants, including being limited to their merchandise offerings and prices. However, if you shop frequently or exclusively at one or two stores, a store charge card might be right for you.
Credit Cards
Credit cards offer many customer perks and benefits and greater flexibility than a store card. You can use it at a variety of places, earn rewards, points, cash back, etc. You are privileged to other products within your credit company’s line and can obtain cash advances from ATMs and cash back at point-of-sale. The APR and fees are typically lower than that of merchant charge cards as well. Credit cards allow you to shop online and to pay your bills, where as a store card will only let you shop from their website, if they have one, and certainly will not help to pay your living expenses.
Ultimately, it is up to you to decide what suits you best. However, for those searching for greater flexibility in their spending, a credit card might be the better choice.
