Charge Cards: The Forgotten Option

For as long as I’ve been writing about personal finance, there has been an constant argument between credit cards and debit cards. Those who have first hand knowledge of how difficult it is to extricate yourself from credit card debt are right to argue that credit cards are evil. Those who have never carried a balance and happily spend their reward points, or cash the cash back checks, are also right to slam reward-less debit cards. I believe that you should understand your own strengths and weaknesses and pick the type of card that suits your needs.

However, in all the arguments, I very rarely see mention of charge cards. By definition, a charge card is simply a credit card that must be paid off in full every month. There is no minimum payment because there is only one payment – the balance in full. There is no interest rate because you can’t carry a balance. There is, however, usually a relatively severe penalty if you fail to pay in full.

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