
What is a Charge Card?
Published Aug 17, 2025 10:54 PM UTC • 7 min read

While ATM cards, debit cards, and credit cards are more well-known when it comes to electronic payment methods, there is a less famous card option that comes with its own set of unique characteristics, that might interest you. If you haven’t guessed it yet, I am referring to a charge card.
Although a charge card looks like any other credit card, it has its own special features that set it apart. We will also dive into more pressing questions like “when is it feasible to use a charge card instead of a regular credit card?”. So, read through the end and get to know charge cards with an in-depth view of their features.
So, What is a Charge Card?
A charge card works somewhat like a credit card. You borrow money from a third party for your expenses and then pay it at a later date and time. It implies that you do not own the money you use for your expenses; instead, you are managing the expenditure on borrowed money, which you are obligated to pay back later.
Charge cards have many unique features that you need to understand. Here are the major features of charge cards. We will explain all the features by comparing them to credit cards in Canada, as both operate on a line of credit.
1. Full Payments Required
Unlike credit cards, the user is obliged to pay the full amount of the charge card at the end of each month when the bill is sent to the user. For credit cards, users have the option to pay the minimum amount due and carry the remaining balance to the next month.
Although this revolving credit line comes at an interest rate that might elevate the outstanding debt, with the charge card, you are obliged to pay the full amount at the end of each month without any liberty to delay the payment. Also, if you fail to pay within the due date, you will be charged up to 30% interest, which is far higher than you would expect on a credit card.
2. No Credit Limit
You might already be aware that every credit card comes with a credit limit. A credit limit is the maximum amount to which you can use the credit card to conduct financial transactions. The credit limit for every user is determined on the basis of his/her personal credit history and credit score.
One of the most significant distinctions of a charge card is its approach to spending limits. Unlike a credit card with its clearly defined credit ceiling, a charge card operates with "no preset spending limit." This doesn't mean spending is infinite; instead, it offers a flexible and dynamic purchasing power that adapts based on your spending habits, payment history, and reported income. This allows for greater flexibility with large purchases, but it comes with the strict requirement that the balance must be paid in full every month.
3. High Credit Score Requirement
To get a charge card, you need to have an outstanding credit score. With no credit limit, the charge card presents a bigger risk for the lender. This is why the requirement is made, since the charge card issuer needs the confidence that the user will be able to repay the debt.
To ensure a lower risk of default, the charge card issuer issues cards to users with an attractive credit history and above-average to excellent credit scores. Though credit cards also require a fair credit score, there are plenty of credit cards that can be acquired without a good credit score or even with a zero or negative credit score, such as secured credit cards. But with charge cards, there is no way to get one without having an outstanding credit score backed by a great credit history.
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4. Annual Fees
Credit cards can be acquired with or without an annual fee. Though most credit cards come with an annual fee, it is quite easy to find one without an annual fee. In comparison, it is impossible to find a charge card without an annual fee. The annual fee for a charge card usually ranges from $150 to $799.
Here is one of the available charge card options in Canada:
American Express Platinum® Card
Our choice for: Travel Perks, Luxurious Travel, and Unlimited Lounge Access
on American Express' website
Welcome Bonus*
Earn up to 100,000 Membership Rewards® points
Rewards Rate*
1x - 2x Points
Annual Fee*
$799
Interest Rates
21.99% - 30%* / N/A*
If you're a frequent traveler, the Platinum card is an excellent choice. It's highly recommended for its extensive travel benefits, including unlimited lounge access for you and a guest at the American Express Lounge collection, making it the best card for lounge access in Canada. The card also offers unique perks not commonly found with other Canadian cards, such as status upgrades at Marriott Bonvoy and Hilton, dining and travel credits, concierge service, airport benefits, Nexus application reimbursement, and more. These benefits can more than offset the annual fee. However, if you don't travel often or are mainly looking for a card that maximizes rewards, this card may not be the best option for you.
Pros
- Offers more perks than any other credit card in Canada, catering to premium users who value extensive benefits.
- Enjoy $400 in annual travel and dining credits, which can offset some of the card's cost.
- Gain unlimited access to over 1,400 airport lounges worldwide, enhancing your travel experience.
- Multiple options for redeeming points for high value, giving you flexibility in how you use your rewards.
- Includes 11 types of insurance coverage, offering comprehensive protection for cardholders.
- It's a metal card, who doesn't love a metal credit card?
Cons
- As with other American Express cards, it may have lower acceptance in some locations compared to other networks.
- The high annual fee of $799 may be a barrier for some users, especially those who do not fully utilize the card's benefits.
- Some benefits are limited to specific airports and hotels.
Rewards*
- 2x points per $1 spent on eligible dining & food delivery purchases (restaurant, fast food, coffee shop, food delivery)
- 2x points per $1 spent on eligible travel purchases (flights, hotels, tours and more)
- 1x point per $1 spent for all other purchases
Insurance*
Coverage*
Emergency Out of province Medical
15 daysTrip Cancellation
$2,500Trip Interruption
$2,500Flight Delay
$1,000Baggage Delay
$1,000Hotel Burglary Insurance
$1000Lost or Stolen Baggage
$1,000Travel Accident
$500,000Car Rental Damage & Theft
YesPurchase Protection
120 daysExtended Warranty
1 year
Benefits*
Details*
Airport Lounge - American Express Global Lounge
Take full advantage of The American Express Global Lounge Collection™ which unlocks access to over 1,400 airport lounges worldwide. This includes The Centurion® Lounge network, Plaza Premium Lounges, and hundreds of other domestic and international lounges designed to enhance your travel experience.Travel Credit
$200Dining Credit
$200 at Select RestaurantsNexus Program Rebate
$100 statement credit every 4 yearsComplimentary Hotel Benefits
Enjoy complimentary benefits that offer an average value of $550 USD at over 1,600 extraordinary properties worldwide when you book Fine Hotels + ResortsStatus lift
Upgrade to Hilton Honors Gold StatusStatus lift
Upgrade to Marriott BonvoyTM Gold Elite statusPriority Travel
At Toronto Pearson Airport get Priority Security lane, Complimentary valet and 15% discount at the Express Park and daily parkConcierge Services
Trip and legal Assistance
American Express® Experiences
Extra points
Earn 2 points on Amex Travel Online purchases and extra points on American Express offers
Eligibility*
Credit Score
FairAnnual Income
N/A
5. Good Rewards & Benefits
Credit cards are known for their rewards and perks. But you will be surprised to learn that charge cards can offer even better rewards and benefits. Though the users are lured by the freedom of no credit limit and great rewards, note that charge cards can be acquired only by having an excellent credit score, which is why not everyone can have one.
When to apply for a charge card?
Now that you know the basic features of a charge card, you are in a better position to know when it is more feasible to apply for a charge card. Here is when we think it is advised to apply for a charge card instead of a credit card:
- You are a sensible spender who does not tend to overspend. Managing your expenses according to your income makes a charge card a great option. This way, you can use the card as per your monthly spending limit and pay the balance in full at the end of the month while enjoying the associated benefits and rewards.
- If you want the freedom to use the credit line without worrying about a credit limit, consider getting a charge card. This way, you can use the card as per your financial needs. If your monthly expenses are unpredictable and you need the flexibility to use the credit line without an upper limit, then the charge card is the perfect fit for you.
- Credit utilization can be tricky to keep track of if you own many credit cards or lines of credit. If you are concerned about keeping your utilization under 30%, consider applying for a charge card instead of a credit card. This way, you can enjoy using credit without stressing over the utilization.
Pros and Cons of Charge Cards
Charge cards come with their pros and cons. Here are some of the major pros and cons that you need to take into account while considering applying for a charge card.
Pros:
- No preset limit to calculate a utilization ratio against
- Excellent rewards and perks
Cons:
- You need an exceptionally high credit score to get the charge card
- A charge card comes with an annual fee that can be pretty pricey
- Charge cards generally come with late payment interest of up to 30%
- If you are a careless spender, then it is quite risky to get a charge card because you might end up in a lot of debt
Frequently Asked Questions
The two main differences are the payment requirements and the spending limit. With a charge card, you must pay your balance in full each month, whereas a credit card allows you to carry a balance. Secondly, charge cards have no preset spending limit, while credit cards have a specific, fixed credit limit.
Yes, virtually every charge card available in Canada comes with an annual fee. For premium cards, this fee can be pretty substantial, often ranging from $150 to $799 or more.
If you fail to pay your balance in full by the due date, you will be charged a high penalty interest rate (often around 30%) on the entire outstanding amount. Unlike a credit card, carrying a balance is not an option.
About the author

Abid Salahi
Abid leads the design and engineering of the FinlyWealth website, making sure everything runs smoothly and looks great. He’s a seasoned software engineer who follows best practices and designs interfa... See full bio
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