Charge cards like the American Express Premier Rewards Gold Card provide a smart alternative to debit cards and traditional credit cards.

What Is a Charge Card?

A charge card is a like a credit card without the option to pay your balance off over time. With a charge card you must pay the entire balance in full every month. Of course, that means that you don’t pay interest, either.

Charge cards have been around longer than debit cards…but with debit cards so wisely available now, why would you pay a fee for a charge card? In short, because charge cards provide all the benefits of a credit card—convenience, rewards, fraud and purchase protection, etc.—without the freely available opportunity to overspend and go into debt.

(In the event you overspend on a charge card, they would just shut your account down until you paid it. Compare that to credit cards, where the issuer actually hopes you’ll rack up a big debt that takes months to repay so they can charge you interest.)

Charge Cards vs. Debit and Credit

The following table shows you, very quickly, the big differences among charge cards, credit cards, and debit cards.

 Charge CardsCredit CardsDebit Cards
Charges InterestNoYesNo
Fraud ProtectionYesYesSome
Purchase ProtectionYesSomeNo
Rewards PointsYesYesNo
Can Lead to DebtNoYesNo
Builds CreditYesYesNo
Annual FeeYesSomeNo

Why Use a Charge Card Over a Debit Card?

For me, the decision to use an American Express Card for most of my purchases was because the card is not linked directly to my checking account. In fact, debit cards kind of scare me.

While debit cards do refund most fraudulent charges—by the time you discover fraud, your money may already be gone. It can take days for your bank to replace your cash. When bills are due, that’s not good. Finally, did you know that you may be responsible for fraudulent PIN-based transactions on your debit card? If somebody steals your PIN and debit card, they can totally clean out your account.

But security isn’t the only reason to use a charge card. Using the charge card makes it easier for me to budget. It means I can buy the things I need throughout the month without worrying about short-term fluctuations in my checking account balance. Finally, I earn American Express rewards points with every purchase. Over the course of the year, those rewards can pay for the card’s annual fee and send some extra cash, airline miles, or gift cards my way.

Why Don’t Charge Cards Have Spending Limits?

American Express charge cards advertise “no pre-set spending limit”.

That doesn’t mean, however, you can go out and buy a new car the minute you get your card. American Express cards do, in fact, have spending limits. They just change as your financial situation changes.

Amex takes your credit history, annual income, and your spending history and measures every transaction against your credit profile. Use your charge card for everyday monthly spending that is within your budget, and you should never hit your limit. If you want to make a big purchase on a charge card, simply call up American Express customer service and let them know—they will let you know if it will be approved.

Best Charge Cards

American Express is the largest provider of personal charge cards. They offer several “levels” of cards with different benefits.

On the low end is the classic American Express Green Card which offers the basic protections of a charge card with a minimalist rewards program for a $95 annual fee.

If you spend at least $1,000 a month on the card, it makes sense to look at the Premier Rewards Gold Card. For a slightly higher fee, you’ll earn better rewards so the card quickly pays for itself.

For big-spending globetrotters, there’s The Platinum Card that carries a $450 annual fee. For that you get a 24/7 concierge and some cool travel benefits like insurance that will evacuate you from a foreign country on a private plane if you need urgent medical care. (Many people do carry this card purely as a status symbol, however.)

Finally, for high rollers there’s the American Express Centurion Card (the so called “Black Card”). Don’t look for an application online, however; the Centurion Card is by invitation only for customers who spend north of $200,000 a year and don’t mind a $2,500 annual fee.

Charge cards may seem like a relic of the past, but people who use them know what they’re doing—they’re safer than debit cards without the debt danger of credit cards.

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About the author

David Weliver
Total Articles: 285
David Weliver is the founder of Money Under 30. He's a cited authority on personal finance and the unique money issues he faced during his first two decades as an adult. He lives in Maine with his wife and two children.