Charge cards are similar to credit cards but they have some fundamental differences. And this article will talk about those differences and what some of the benefits and negatives are about these cards and how it compares to a credit card.

Charge cards have been around since almost the turn of this century, from when the automobile was struggling to make inroads against the horse and buggy. When top hats were still all the rage. You get the idea. They were the first ones in on this race to offering consumers some sort of credit. But it seems that at least since the seventies they have lost out to the credit cards and I think there is a good reason for this which I’ll talk about below.

Let’s talk a little bit about the history of charge cards so that the rest of the discussion will make sense. It was in 1914 that Western Union offered what most of us would consider as this kind of a card, but this one of course was printed on paper. But it was nonetheless the first charge card to be offered to consumers.

So in 1914 charge cards made inroads into allowing consumers to buy on credit. But it wasn’t until 1957 and Frank McNamara’s Diners Club that the official charge card industry took off. Many of you are probably familiar with Diners Club though they don’t have as big a share as they used to back then. Primarily because less and less businesses are accepting them.

But probably the best know charge card is issued by American Express who in 1959 issued the first plastic embossed card of this kind. And to this day they are the biggest issuer of charge cards in the world.

So, what exactly is a charge card and how does it differ from the normal credit card that most people have? That is a great question, I am going to tell you gentle reader exactly what this card is.

It is a card that allows you to buy products on credit. In this way it is similar to a credit card. But unlike a credit card, a charge card requires that the full amount be paid at the end of each short term loan period. Usually this loan period is for one month but it can be longer. In addition to requiring that the loan be paid off at the end of the loan period, these cards also very often don’t have a limit depending on your credit score and other factors. Want that yacht? Buy it now, but be sure you have half a million dollars at the end of the month.

So what are they going to do if I don’t pay it off in full you might be thinking? You are a wise one young grasshopper. But the charge card companies are wiser. You will be dinged with a huge penalty that can be as much as 5% of the balance. In addition they will ding your credit score and likely cancel your account. Ouch, is right.

Charge cards are very useful and an inexpensive way to buy on credit. But you’ve got to make sure you have the money to pay the balance in full each month. These are certainly not for the footloose and fancy free. But they are worthy of your consideration if you have a will of iron and are very financially astute. They aren’t as popular as credit cards, because sadly in today’s age not many of us have the fortitude to be able to use these cards appropriately and wisely. However, if you are one of the few who are not afraid of handling vipers bare handed, then I would strongly recommend you take a look at them.