Charge card
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Credit · Debt |
Employment contract |
Retirement |
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Personal budget and investment |
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A charge card is a type of credit card that enables the cardholder to make purchases which are paid for by the card issuer, to whom the cardholder becomes indebted. The cardholder is obligated to repay the debt to the card issuer in full by the due date, usually on a monthly basis, or be subject to late fees and restrictions on further card use. Charge cards are distinct from credit cards in that credit cards are revolving credit instruments that do not need to be paid in full every month and a balance may be carried over, on which interest is paid. Charge cards are typically issued without spending limits, whereas credit cards usually have a specified credit limit that the cardholder may not exceed. Most charge cards are held by businesses, corporations or executives thereof, and are issued to customers with a good or excellent credit score.
History
In 1914, Western Union opened the first charge account for its customers and provided them with a paper identification.[1][2] There were many larger department stores which opened store charge accounts for their customers with paper identification, enabling the customer to make purchases on credit provided by the store. However, these accounts could be used only within the store which issued them.
In 1950,
In Europe, the
Operation
The user of the charge card has to pay their account balance at the end of each month and the charge card company, unlike a credit card, does not charge interest. A charge card company's main source of revenue is the
Many charge cards have the option for users to pay for some purchases over time. American Express charge card customers, for instance, can enroll in the Extended Payment Option (internally referred to as ExPO) to be able to pay for purchases over $200 over time,[4] or in Sign & Travel to be able to pay for eligible travel-related expenses over time.[5]
Most charge cards also have a feature called No Preset Spending Limit (NPSL).
See also
References
- ^ "Charge card: What it means", encyclopedia.com
- S2CID 216424288
- ^ "Maestro Cards: What they are, pros & cons". October 30, 2019. Archived from the original on September 7, 2022. Retrieved August 15, 2022.
- ^ American Express Extended Payment Option Archived December 6, 2003, at the Wayback Machine
- ^ American Express Sign & Travel
- ^ Ron Lieber (May 22, 2010). "How the Finance Bill Affects Consumers". The New York Times. Retrieved August 15, 2022.
- ^ "No Pre-Set Spending Limit Credit Card Study – 2010". CardHub.com. Archived from the original on June 1, 2011. Retrieved June 23, 2011.
- ^ Damon Darlin (March 4, 2006). "Tax Bills and Plastic Don't Mix". The New York Times.