What is a charge card?

Charge cards let you manage your personal or business spending differently to credit or debit cards. Here is how they work and everything else you need to know about them.

Share this guide

Charge cards pros and cons


  • Usually no interest charged

  • Some have no credit limit

  • Others have very high credit limits

  • Little chance of getting into debt

  • Some offer reward schemes

  • Businesses can monitor spending


What are charge cards?

They work like credit cards, letting you spend money in person, online or by phone.

Are they the same as credit cards?

No, the difference is that charge cards do not let you borrow money or spread the cost of purchases. You have to repay the entire balance in full each month.

Credit cards let you make a minimum repayment each month and then charge you interest if you pay the rest over the following months.

Charge cards are not advertised with interest rates because your balance should never roll over into the next month.

Charge cards do not usually come with limits on what you can spend or owe each month. This means you know the card will be able to cover the cost when you spend on it.

Where can you use them?

You can use charge cards in most places you could use a credit card including:

  • In shops, restaurants or other businesses

  • Online

  • In cash machines

  • Over the phone

  • In other countries

  • Using mail order services

You can get charge cards from several banks and card providers. You can get cards processed by:

  • American Express

  • Visa

  • MasterCard

  • Diners Club

American Express, Diners Club and other charge cards are not accepted by some retailers and businesses, so it is worth having a debit or credit card as a backup.

Here is everything you need to know about the difference between Visa and MasterCard.

How much do charge cards cost?

They come with several fees but not an interest rate. This is because you cannot use charge cards to borrow money beyond the date you have to repay your balance each month.

They come with the following charges:

  • Annual fees: These can cost hundreds of pounds each year, but some offer lower fees, no annual fee or no fee for the first year.

  • Cash withdrawal fees: A percentage of the amount you withdraw, often with a minimum charge of around £3.

  • Fees for spending abroad: A percentage of what you spend, and they sometimes come with a minimum charge of around £3.

Penalties for late payment

If you do not repay your balance in full by its due date you could be charged:

  • A fixed late payment fee of around £15

  • A percentage of the amount due (e.g. 3.5%), charged every month until you pay it off

  • Interest charged at a rate higher than most credit cards

  • A fee of around £20 if your payment bounces

  • A fee of around £10 every time the card company write to you to chase a missed payment

Your card could also be cancelled and your credit record will be affected if you miss any repayments.

Benefits with charge cards

You can get a range of rewards with charge cards, but those with more rewards usually come with higher annual fees. Rewards can include:

  • Travel insurance

  • Reward schemes like shopping vouchers

  • Breakdown cover

  • Discount schemes

  • Cashback

  • Golf club membership

  • Concierge services

  • Airport lounge access

They may offer their own purchase protection or extended warranty cover because they do not come with the Section 75 protection that credit cards offer.

Who can get a charge card?

You can get charge cards for yourself or for your business.

Many charge cards will only accept you if you earn more than their minimum amount (e.g. £30,000) and have a strong credit record.

Businesses can issue several cards to their employees and keep track of what each one has spent when they pay them off each month. As long as repayments are made in full there will be no interest charges and debts on the card.

Some cards even offer detailed management information, which includes reports, patterns and statistics on spending.

How to get a charge card

When you compare charge cards, check the annual fee and only look at ones you can afford.

Check the benefits each card offers and work out if you would use them and if they are worth the fee the card charges.

If you think you could ever miss a repayment or would want to use the card to borrow, a credit card could work out much cheaper. This guide explains how to choose the right type of credit card.