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Charge cards offer a unique alternative to traditional credit cards, providing flexible spending without a preset credit limit. Applying for this type of card doesn’t always affect your credit score, but some charge card issuers—like American Express—require a hard inquiry that can lower your credit score temporarily.

In this guide, we’ll explore how charge cards work, their advantages and drawbacks, and some popular options available today.

Key takeaways

  • Charge cards require full payment each month: Unlike traditional credit cards, charge cards do not allow revolving balances. The full amount must be paid by the due date.
  • There’s no preset spending limit, but responsible use is crucial: Late payments can result in fees and negatively impact your credit score.
  • Applying may or may not impact your credit score: While many charge cards don’t require a credit check, some do (namely American Express), which results in a temporary dip in your credit score due to a hard inquiry.

Charge card vs. credit card

Charge cards and credit cards may seem similar, but they have key differences that impact spending, payments, and credit scores. Here’s a closer look at charge cards versus credit cards.

Charge Card vs Credit Card
Feature Charge Card Credit Card
Balance Payment Full payment required each month Can carry a balance with minimum payments
Interest Charged None Interest applies if balance isn’t paid
Spending Limit No preset limit Fixed credit limit set by issuer
Credit Utilization Not impacted Affects credit score
Annual Fees Often high Varies (can be low or high)
Credit Impact Reports payment history, but no utilization Reports payment history and utilization
Best For High spenders who pay in full monthly Those needing flexibility in payments

How does a charge card work?

A charge card is a type of credit card that requires you to pay the full balance each month. Unlike traditional credit cards, charge cards do not have a preset spending limit, which can be advantageous for managing large expenses. 

However, the flexibility comes with a price: Cardholders must pay off the entire balance by the due date to avoid late fees and potential damage to your credit score.

FAQ
What is the difference between a charge card and a debit card?
A charge card has no preset limit but requires full monthly payment, while a debit card deducts funds instantly from your bank.

What are charge cards used for?

Charge cards are typically used by businesses that have significant monthly expenses and want the convenience of flexible spending without the constraints of a credit limit. They are popular among business owners, frequent travelers, and those who prefer not to carry a revolving balance. 

Similar to credit cards, charge cards often come with rewards programs, travel benefits, and other perks that make them attractive for high spenders.

FAQ
Which type of card impacts your credit history?
Both credit cards and charge cards impact credit history, but differently. Credit cards affect payment history, credit utilization, and credit mix, making them more influential. Charge cards also report payment history and contribute to credit history but don’t impact credit utilization due to no preset limit.

Do corporate cards affect credit scores? 

Most charge cards don’t require a credit check or personal guarantee, which means they typically won't impact your credit score. 

However, charge cards from American Express do require a hard credit check and affect your credit score.

When this happens, the issuer will conduct a hard inquiry on your credit report, leading to a temporary dip in your credit score, usually by a few points. This impact is generally short-lived, with your score recovering within a few months, assuming there are no other negative factors.

FAQ
Are charge cards better for credit? Does applying for credit cards hurt credit?
Credit cards often have a stronger effect on credit scores due to their influence on utilization, and applying for credit cards or certain charge cards can temporarily hurt your credit.

What are some examples of charge cards?

Here are some popular charge card examples, each with its own set of features, rewards, and eligibility requirements.

Ramp Corporate Card

The Ramp Corporate Card is a charge card designed for businesses, offering flexible spending without a personal credit check or impact on the business owner's credit score. It provides automated expense management, cashback rewards, and real-time insights to help companies optimize their spending. 

With no credit limit and a focus on financial efficiency, Ramp is a popular choice for startups and growing businesses looking to scale responsibly.

To qualify, your business must be a U.S.-registered corporation, LLC, or LP (sole proprietors and unregistered businesses are ineligible), maintain at least $25,000 in a U.S. business bank account, conduct most operations within the U.S., and have a physical U.S. address (P.O. boxes and virtual offices are not accepted).

American Express Gold Card

The Amex Gold Card is a charge card that offers rewards on dining and grocery purchases but comes with a high annual fee. It earns Amex Membership Rewards points on purchases, with higher rates for restaurants, supermarkets, and certain travel expenses. 

It has no preset spending limit, but approval for large purchases depends on your payment history and financial profile. While it provides some travel and dining perks, its benefits may not outweigh the cost for those who don’t spend heavily in these categories.

Diners Club Charge Card

The Diners Club Charge Card, introduced in 1950, was the world's first multipurpose charge card, allowing members to make purchases and pay the balance in full each month. It offers rewards through its Club Rewards program, which allows cardholders to earn points on eligible purchases at over 100 million merchant locations worldwide. These points can be redeemed for travel, merchandise, and more.

However, as of March 2021, new individual applications for Diners Club cards are not being accepted in the United States, though existing cardholders continue to receive support.

The Platinum Card by American Express

The Amex Platinum Card is a premium charge card with a high annual fee, primarily catering to frequent travelers. It offers airport lounge access, hotel perks, and statement credits, though many benefits require enrollment and specific spending to maximize value.

 

The card has no credit limit, but large purchases depend on payment history and financial profile.

 

While it earns Membership Rewards points on purchases, its rewards structure is more beneficial for those who spend heavily on travel-related expenses. For everyday spenders who don’t travel often, the high cost may outweigh the perks.

How applying for Amex cards affects your credit score

American Express (Amex) offers both charge cards and traditional credit cards, and applying for either will result in a hard inquiry on your credit report. These hard inquiries affect your credit score in the same way as other credit card applications.

However, Amex offers a prequalification process that allows you to check potential approval with only a soft inquiry, which doesn’t impact your score. This is a wise first step for determining your eligibility before formally applying and risking lowering your credit score (it will be lowered whether your application is approved or denied).

If you decide to proceed with a full application, the hard inquiry will occur, and your credit score may experience a temporary dip.

Do charge cards build business credit?

Charge cards are reported to credit bureaus and can help build credit, but they do so differently than traditional credit cards. Since charge cards require full payment each month and don’t have a preset spending limit, they don’t impact credit utilization—a key factor in credit scores. 

However, payment history is also a contributing factor to your credit score. On-time charge card payments can positively affect your credit profile over time, while missed payments can hurt it.

FAQ
Does an Amex card build credit?
American Express reports both charge and credit card activity to credit bureaus, meaning your spending habits impact your credit score. However, Amex charge cards, like other charge cards, do not affect credit utilization since they have no preset spending limit.

What are the disadvantages of charge cards?

  • The full monthly payment requirement can be challenging for companies and individuals needing more payment flexibility.
  • Without a preset limit, it may be tempting to spend beyond you or your company’s means.
  • Since spending doesn’t contribute to your credit utilization ratio, charge cards have a smaller impact on credit building than traditional credit cards.
  • Many charge cards come with steep fees.
  • Fewer issuers offer charge cards, and they often require good to excellent FICO score/credit to qualify. Notably, the Ramp Corporate Card does not require a credit inquiry to be eligible—or any annual fees.

Apply for a Ramp Corporate Card with no credit check

At Ramp, we understand the importance of maintaining a healthy credit score. That's why our corporate card solutions don't require a credit check, allowing you to access the benefits of a charge card without any impact on your credit score. 

With Ramp, you can enjoy flexible spending, valuable rewards, and a suite of tools to manage your business expenses efficiently—all without worrying about your credit score.

Try Ramp for free
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Finance Writer and Editor, Ramp
Ali Mercieca is a Finance Writer and Content Editor at Ramp. Prior to Ramp, she worked with Robinhood on the editorial strategy for their financial literacy articles and with Nearside, an online banking platform, overseeing their banking and finance blog. Ali holds a B.A. in Psychology and Philosophy from York University and can be found writing about editorial content strategy and SEO on her Substack.
Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

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