Unlike credit cards, charging cards require full payment every month in that they cannot be balanced. There is also no preset spending limit. This is attractive when you want to avoid debt but need strong purchasing power.
But does a charge card affect your credit score just like a credit card does? In most cases, yes. The biggest difference is that there is no preset spending limit, so you will be billing a charging card that does not affect your credit usage.
How does a charge card affect your credit score?
When used properly, it can help you build your credit in almost the same way you can get a credit card. Decompose by each credit score factor.
How is a charge card different from a credit card?
Charge cards and credit cards work similarly, but there are some important differences between them.
| Charge Card | Credit Card | |
| balance | Full payment is paid monthly | There is a minimum payment deadline each month – you can carry the balance, it receives the interest rate |
| Interest charged | none | Average 20.09% |
| Preset spending limits | none | Issuer determines credit limits Based on creditworthiness and other factors A secure card Typically, the limit is equal to the security deposit |
| Annual fees | Often, yes, and they can be quite a thing | sometimes |
| Minimum credit score | Often, over 670 | You can find credit cards for all levels |
Charge Card Example
Currently the most common charging cards are business cards like Capital One Spark Cash Plus, InkBusinessPremier® Credit Cardand some Gas cardlike the BP Business Solutions MasterCard* and Shell FleetPlus® cards.
American Express no longer uses the term “charge card” for many of them Reward Cardbut it still offers cards with no preset limits. You can choose to pay a full monthly invoice or take advantage of the long-term payment option with interest.
Some of these American Express cards – American Express Platinum Card or American Express® Gold Card -Many credit cards with high annual fees but with limits also charge annual fees.
Charge cards do not affect your credit usage
When using a charge card to build credit, the elephant in the room is credit usage. Charge cards have no preset limits, so they won’t affect you Credit usage rate – Or how many credit limits you use.
This is good news for using a charging card for large purchases. Making large-scale purchases with credit cards can bring you closer to credit limits and negatively affect your credit usage. However, putting the same amount on your billing card will not affect your credit usage, and therefore will not affect that portion of what constitutes your credit score.
Is the billing card good for your credit?
Payment history is the most important factor for both you FICO Credit Score And your VantagesCore. Paying your bills on time will help you with whether you pay a fee or a credit card. Also, unlike most rent, utilities, cable and mobile phone bills (all have to be paid in full like an installment loan), fee cards are regularly reported to the credit viewer. This means that your good payment history will appear. So paying your bill on time can help your score whether you use your billing card or credit card.
However, this means that billing cards that cannot affect credit usage are ultimately less effective than traditional credit cards that help you build your credit. If your main focus is on building credit, consider your credit card first.
Conclusion
Understanding the type of card you need is a personal choice. There is Excellent credit card Charge your cards to meet a variety of rewards, budgets and lifestyle needs. Determine between a Charging and credit cards This involves determining whether the more restrictive payment requirements of billing cards fit your budget and whether you primarily need a card to build credit rather than other financial features.
Both types of cards will help you with your credit, so consider everything a particular card has to offer when comparing options and making a decision. If you need help narrowing your options, check out Bank Rates CardMatch™ Customized recommendation tools.
*Information about BP Business Solutions MasterCard and Shell Fleet Plus® Cards are collected independently by Bankrate.com. Card details have not been reviewed or approved by the issuer.
