The allure of a black charge card is undeniable. Anyone who is handed the card will usually immediately recognize a black card by its unusually heavy weight as it is made of pure titanium. Yet, aside from the vague notions of elite wealth that a black charge card implies, very few actually understand how black cards, or charge cards for that matter, even function. Charge cards operate very differently from a credit card as with a charge card the holder is required to pay the entire balance of the card every month or face an initial late fee comparable to a checking account’s overdraft fee. For many, the very point of having plastic is to accumulate a balance that one doesn’t have to pay down all at once so the idea of charge cards may seem unusual, and they do have various aspects that make them more or less desirable.

The Charge Card

As it stands, charge card services work very simply: qualified applicants pay a sign-up fee and a subsequent monthly fee for their card which has a total limit that reflects each customer’s individual debt to income ratio along with many other aspects of their credit history. As mentioned, these cards must be paid off in full every month and failure to do so repeatedly can have a very negative effect on one’s credit. The majority of people have a difficult time making one big lump payment every month and as a result, most charge card companies are extremely selective in who they approve and good credit is a must. Most charge cards come in varying levels of status, many beginning at a gold card and reserving the “black” designation for the elite class. Each card offers varying levels of benefits and demands an escalating scale of fees as the basic cards usually cost around $100 per year and the some black cards are known to require a $2500 initial start-up fee plus $7500 per year after that. For a little perspective on how lucrative the card is, a recent report has put the average black card holder at $16.3 million in total assets and $1.3 million in annual income.

Why a Charge Card?

Just as traveler’s checks were introduced as a way to circumvent the hassle of currency when traveling internationally, charge cards are meant to replace cash completely. While many balk at having to pay the entire card down every month, it allows a user to completely replace hard cash while earning numerous benefits for every dollar that they are charging to their account. Some of the biggest benefits offered by charge card providers to their customers are services that replace broken items purchased on their cards including phones and computers, as well as included car rental insurance, roadside assistance and free event tickets. As the level of the card increases, as do the perks reserved for black card holders which can include personal shoppers, first-class flight upgrades, free nights at exclusive hotels around the world and the oft-rumored non-existent credit limit. In theory, one could buy a house in full on their black card, as long as they have the means to pay their balance off at the end of the month.

Credit Considerations

Aside from the so-called “perks” of charge cards, up until recently they have presented holders with a significant advantage in terms of their credit score. Under the old methods of calculating credit, charge cards were viewed similarly to credit cards and its credit limit was determined to be the highest balance the card ever held. In that frame, charge cards looked like high-limit credit cards that were constantly paid down monthly and usually had a low balance, which is an absolutely terrific asset for one’s credit. More recently though, charge cards have been viewed more accurately and while they do not offer the same almost unfair advantage in the credit score world, having a charge card is still viewed more positively by credit agencies as one must have stable income and an already great credit rating to even be approved for a charge card in most cases.

Why a Credit Card?

The biggest positive of a credit card is the ability to charge now and pay off gradually. Credit-wise, the best thing one could do for their credit with a credit card is continually pay the card off every month as this inspires a rise in one’s credit score and a rise in their card’s credit limit. A high balance of “revolving credit accounts”, a.k.a. credit cards, can really damage one’s overall credit score and the interest rates of most credit cards makes them financially unwise for long-term debt. Nonetheless, credit cards are absolutely key in the financial world and the easiest way to build credit is with a credit card. High-end charge cards are usually not available to those with a short credit history or poor credit and are really not options in terms of building or rebuilding credit, but there are cards that work similar to charge cards called “secured credit cards” that function in a similar manner but are used specifically to rehabilitate bad credit. Also, many credit cards now offer benefits like a “cash back” program that refunds users a certain percentage charged every month and competitive frequent flier miles that make the allure of charge card benefits less glaring.


In the end, charge cards and credit cards are both great options and offer very similar benefits especially following recent changes in credit score calculation. For many, charge cards maintain their allure because of their position as a status symbol and the “black card” will most likely continue to be the ultimate accessory for the wealthy for some time to come.

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One Response to “Charge Card vs Credit Card: Which is Better?”

  1. Interesting analysis. I prefer the credit card for the potential credit score improvements. However, I can see why the charge card has some serious appeal as well.

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