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What is a Charge Card?

charge card

While ATM cards, debit cards, and credit cards are more famous when it comes to electronic financial transactions, there is a less famous electronic card option that comes with its own set of unique characteristics that might interest you in Canada. 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 sets it apart from the other cards. 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 the money you use for your expenses is not owned by you, rather you are managing the expenditure on borrowed money which you are obligated to pay later.

But unlike credit cards, there are many unique features of charge cards that you need to understand. Here are the major features of charge cards. We will explain all the features by making a comparison to the credit cards in Canada because both cards work 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, the user has the liberty of paying the minimum amount due and revolving the rest of the amount to the next months.

Although this revolving credit line comes at an interest rate that might elevate the outstanding debt. But 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 a whopping 30% interest rate which is much higher than you 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.

Unlike credit cards, the charge card doesn’t come with any credit limit. With no credit limit, the user can conduct the transaction to any desired amount without ever worrying about the limit. No credit limit also means that you need to be aware of your own spending limit.

3. High Credit Score Requirement

To get the charge card you need to have an outstanding credit score. With no credit limit, the charge card comes with 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 that there is a lower risk of default, the charge card issuer issues the cards to users who have 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 a proven credit score backed by a great credit history.

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 $550.

Here are some of the available charge card options in Canada:

1. American Express® Aeroplan® Card

amex aeroplan card

This card comes with an annual fee of $120 and is officially considered a charge card. With the Aeroplan card, not only do cardholders get to expedite their journey to Aeroplan's Elite status, but they along with eight of their friends or family members can also enjoy a complimentary checked bag on Air Canada flights. Reaching the Elite status grants them an invitation into Air Canada’s Maple Leaf airport lounges and simplifies flight upgrade procedures.

The most recent limited-time bonus is a free 6-month Uber Pass membership. Additionally, the card encompasses various travel insurance coverages, lessening the requirement for third-party insurance when venturing out-of-province. This card is not just a ticket to a host of travel benefits but also a gateway to a range of exclusive offers.

2. American Express Platinum® Card

amex platinum card

The American Express Platinum Card breaks the mold by being a "card with no pre-set spending limit" instead of a standard charge card. However, it pretty much carries all the cool features you'd expect from a charge card. There's no cap on how much you can spend, although there's a hefty annual fee to contend with. But hey, with this card, you get to dive into a pool of awesome benefits. The twist in the tale comes with how you repay what you spend. American Express hints that if you go wild on spending without a solid repayment history, some purchases might just hit a wall.

Now, about the interest rate - the Platinum card has a soaring 30% annual rate. But you might stumble upon an offer to nestle part of your balance into a more comforting 20.99% - 28.99% annual interest rate zone. With rates touching the sky, it's clear as day that you're supposed to pay back the full balance each month. If not, it might be wise to scout around for another high-rewards card that's a bit gentler on the wallet.

Here’s where it gets interesting. The way American Express throws around an annual interest rate, just like other regular credit cards do, kind of places the Platinum Card on a swing between a charge card and a credit card. But let’s be real, you'd need to have money to burn to even think about carrying a balance on it from month to month.

Now, if you decide to ride the traditional charge card wave with this one, you're in for some sweet deals. For starters, you get a 24/7 concierge service at your beck and call, loads of travel insurance goodies like emergency medical insurance, a NEXUS statement credit, some snazzy hotel upgrades, access to those fancy travel lounges, and an extra $200 to splurge on travel every year, among other cool perks. So, the Platinum card is not just about spending; it’s a ticket to a pretty lavish lifestyle!

5. No Credit Utilization Impact

Credit cards come with a pre-defined credit limit. Credit utilization refers to the ratio of financial transactions conducted to the credit limit. Generally you want to keep your transactions be up to 30% of your credit limit to maintain a healthy credit utilization. Unlike credit cards, the charge card doesn’t come with any credit limit which means there is no pressure of managing credit utilization. This is why the users of charge cards can conduct financial transactions without any stress of lowering or affecting their credit score which is quite important to maintain in Canada for any financial assistance in the future.

6. Good Rewards & Benefits

Credit cards are known for their rewards and perks. But you will be surprised to know that charge cards can come with 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 only acquired by having an excellent credit score which is why not everyone can have it.

7. Small Number of Options

You can have any options when you want to acquire a credit card. However, users don’t get many available options of charge cards in Canada. This is why users get to choose among the handful of options available for them as a charge card. There are no more than 5 charge cards available in Canada. Though the options are very few still you can enjoy the ease and comfort is using a charge card.

When to apply for a charge card?

Knowing the basic features of a charge card, you are in a better state to know when it is more feasible to apply for a charge card in comparison to a credit card. Here is when it is advised to apply for a charge card instead of a credit card:

  • When you are a sensible user and do not tend to overspend. If you can manage your expenses as per your affordability then it is a great option to get a charge card. 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 crave for freedom to use the credit line without having to worry about the credit limit then it is better to get a charge card. This way you can use the card as per your financial needs. If your monthly expenses are not fixed and you need the liberty to use the credit line without any upper limit then the charge card is the perfect fit for you.

  • Credit utilization can be tricky to keep track if you own many credit cards or lines of credit. If you are worried about keeping your utilization under 30% then it is better to apply 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.


  • No worry about credit limit or credit utilization

  • Amazing rewards and perks that can offer you great ease


  • You need an exceptionally high credit score to get the charge card which limits your ability to get a charge card.

  • Charge card comes with an annual fee that can be quite pricey in your pocket.

  • Charge cards generally come with high-interest rates like 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. Having no credit limit can be a big risk for some people.


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I hope you enjoy reading this article.

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