Credit card vs Charge card - what’s the difference and which one to choose?

Not sure about the difference between a charge card and a credit card? While both can be handy for convenient spending in person and online, they do work differently in some important ways.

Before you pick the right card - or cards - for your needs, read our full charge card vs credit card review so you can work out which suits you.

What is a charge card?

A charge card is a payment card which allows you to make purchases online and in person, with a monthly bill which you must settle in full by the due date. You might find that with a charge card there’s not an upper spending limit set, so you can use the card as often as you wish for purchases, as long as you’re able to make a full repayment when your bill comes in.

Charge cards are different to both credit cards and debit cards. All of these different spending card types have their own advantages and disadvantages, though, so it’s worth considering each of them when deciding which may work for you. We’ll dive into the detail of charge card vs credit card a little later to help you compare.

In Malaysia the primary issuer of charge cards is Maybank. Maybank issues 3 different charge cards, all on the American Express network¹:

• American Express Card
• American Express Gold Card
• The Platinum Card

It’s worth noting that these cards come with minimum salary requirements and may have fairly hefty annual fees. Depending on which card you pick though, you’ll also get a range of perks and benefits which may mean that the costs are worthwhile. The Platinum Card² for example has a minimum annual income requirement of 190,000 MYR/year, and an annual fee of 3,250 MYR for up to 5 cards. You’ll unlock a range of luxury benefits, but you’ll have to repay your bill in full monthly, or face a penalty fee³.

What’s the difference between charge card and credit card?

There are a few things which are similar between charge cards and credit cards:

• You can use both to spend in person and online, wherever the card network is accepted
• Both allow you to spend on credit, and repay the card issuer later
• You’ll likely pay an annual fee and a range of transaction costs with both
• Some sort of penalty is likely to apply if you fail to make required repayments on time

The way you use a charge card day to day is similar to the way you’d use a credit card. However, there are a couple of important differences:

• Credit cards typically have preset upper spending limits - charge cards may not
• Credit cards allow you to roll over some of your bill to pay in future - charge cards require you to clear your dues in full every month

Here’s a head to head run through of the key features of both charge cards and credit cards:

	Charge card	Credit card
Options available	Few options available	Widely available
Spending limits	May not be subject to limits	Limits apply based on your credit history and the card type
Eligibility and fees	May be subject to strict eligibility including minimum earning requirements Annual fees can be high	Broad range of eligibility options and annual charges, including cards with no annual fee
Repayment plan	Pay back in full every month	Pay back a minimum every month - the remainder can be rolled over for future repayment (charges and interest apply)
Penalties	Late payment penalties are likely to apply	Late payment penalties are likely to apply

Credit card vs charge card - pros and cons

Both credit cards and charge cards have their own advantages and disadvantages, which can make them more suited to different customer needs. If you’re not sure where you land in the credit card vs charge card debate, here’s a quick summary of some important pros and cons of each.

	Pros	Cons
Credit card	Easy to use and accepted globally Spread the cost of repayments over several months Widely available from different banks and card providers	Interest and penalty fees may apply if you don’t clear your bill Spending limits vary based on credit history and card type Transaction fees can apply, such as cash advance or foreign transaction charges
Charge card	You may have no preset spending limit Cards offered at different entry levels, including lower cost, simpler options, and prestige products Some cards come with luxury perks	May have a high annual fee depending on the card you select Minimum salary requirements are likely to apply You’ll need to repay monthly or face penalty fees

Which one should you choose?

Whether a credit card or charge card is right for you will depend a lot on your personal preferences and how you like to manage your money.

If you’re confident that you can clear your bills every month, a charge card can offer more flexible limits and some great perks. This is especially so if you’re willing to pay a higher annual fee to unlock more benefits with a card like the Maybank Platinum Card. However, there’s not a huge number of banks which issue charge cards in Malaysia so you’ll have a limited choice compared to credit cards.

On the other hand, a credit card might suit you better if you’d like to spread the cost of purchases over a few months and don’t mind paying interest for this facility. There are many credit cards on the market, so the chances are that you’ll be able to find one which has benefits you’d value, with a balance of cost and convenience that suits your needs.

No matter whether you pick a charge card or a credit card, there will be some fees involved, so it’s important to read through the card terms and conditions carefully before you sign on the dotted line. Look out for penalty costs and charges, as well as transaction fees such as extra costs when you spend in foreign currencies. Or, pick a specialist card whenever you need to spend internationally, to drive down the costs of currency conversion - more on that next.

Shopping online or travelling abroad? Save up to 6.25 MYR per transaction with the Wise card

While a charge card or credit card can be handy for earning rewards as you spend, or for spreading the costs of big purchases over a few months, they’re not the right option every time.

If you shop internationally, travel often or spend in foreign currencies, you may find you’re better off with a Wise Account and card to use alongside your other spending cards. The Wise card is a debit card, which means there’s no chance of running into interest or penalty charges - you’ll only ever pay low, transparent fees for the services you need.

Wise is a specialist in currency conversion, which uses the mid-market exchange rate with no foreign transaction fees when you spend overseas. Just top up your Wise Account in ringgit or the currency of your choice, and convert to the currency you need with fees as low as 0.41%. You can then spend your balance freely with your Wise card, in person, online and for cash withdrawals. Wise supports 50+ currencies, so you’ll be able to convert to the currency you need for plenty of overseas adventures - and save up to 6.25 MYR per transaction compared with credit cards from major banks.

Get a Wise card today 💳

Please see Terms of Use for your region or visit Wise Fees & Pricing: Only Pay for What You Use for the most up-to-date pricing and fee information.

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Sources:

1. Maybank charge cards
2. Maybank Platinum charge card
3. Maybank Platinum charge card - terms and conditions

Sources checked on 30/01/2023