From hassle-free payment of your bills to your day to day shopping, credit and charge cards have become a convenient mode of payment. However, there is a difference between how both the cards work. Knowing about that difference will help properly plan your purchases and spending needs.
A Credit Card lets you pay for your purchases without cash. Credit Cards offer a line of credit or loan that allows you to make purchases and pay back the amount later. If you fail to pay the balance due in full, you’re charged an interest on the amount owed.
A Charge Card works like a Credit Card, but without offering the option of making part payment. You are required to pay your charge card bill in full by the due date. Charge Cards offer a 'no pre-set' spending limit. A 'no pre-set' limit means that your charges are approved based on your spending pattern, financials, credit record, and your account history.
The period in which the reported transactions have taken place. Generally, your statement period will be every 30 days; the actual dates can vary slightly from month to month.
When you use your credit card, you are borrowing money from a lender, and interest is charged on the due amount unless you repay the full balance within a specified period. Interest is denoted as an Annual Percentage Rate (APR) or Monthly Percentage Rate (MPR).
Interest-free days are the time from when you buy something using your credit card to when the interest starts getting added to that purchase balance – usually at the beginning of your next statement period.
When your statement arrives, you will have a choice of repayment options. You can pay off the entire credit card bill on, or before, the Payment Due date – in which case you'll avoid paying interest. You can also make Minimum Due or a part payment, in which case you will need to pay interest on the pending balance in the next statement.
The amount you owe at the end of a particular statement period.
Has talk of interest, annual fees, rates and percentages left you feeling confused? Our simple Credit and Charge Card guides are a great place to start.