Many charge cards have tremendous bonus programs from things like 5% cashback to free companion flights on airlines - their rewards programs are typically better than rewards programs for credit cards. You don't have to have the money on hand for a purchase with a charge card, nor do you run the risk of carrying a balance that will charge you interest. Charge cards are typically associated with American Express many store chains often issue their own charge cards as well, which can only be used at that store. Some charge cards also have an annual membership fee. However, you're required to pay the full balance at the end of the month. Like credit cards, charge cards extend credit to you from the issuer. ![]() Debit cards often don't have the same consumer protections that credit cards and charge cards have - if your card is stolen, your protection against unauthorized purchases can be weak.Īnother disadvantage is that very few debit cards have rewards programs of any kind.Ĭharge cards are often confused with credit cards, but they function in a fairly different fashion. ![]() The biggest disadvantage is that you have to keep a very close eye on your account balances because you can overdraft your account if you're not careful. You also don't have to have good credit to get a debit card you often get one with your checking account. Plus, debit cards are flexible and convenient for day-to-day purchases. This is a huge advantage for people struggling with debt because it keeps them from overspending. You can't get into debt trouble with a debit card, since it does not allow you to spend more money than you have in your account. Each time you use the card, money is automatically taken from your checking or savings account to cover the purchase. Over a long period, that interest can be incredibly costly.Ī debit card is linked to your checking or savings account. Then, when you can't pay off the card, you usually pay a hefty amount of interest on that unpaid amount. The ease of using credit cards and the lack of pressure to pay off what you owe make it very easy to make poor purchasing decisions. The big disadvantage is that all the flexibility is a double-edged sword. Consumer protection with credit cards is usually pretty strong, too they'll often help you deal with fraudulent purchases and don't leave you out to dry if you lose the card.Īlso, a good credit card use helps you build a good credit report, saving you money on insurance and helping you with loans in the future. Many credit cards also have rewards programs and benefits, offering everything from 2% cash back on all purchases to rental car insurance when you travel. You also have an indefinite amount of time to pay back that money, though you do have to make a minimum payment each month on what you owe. The biggest advantage of a credit card is flexibility you can make purchases without actually having the cash on hand at the moment. ![]() Mastercard, Visa, and Discover are the major types of credit cards. Each time you use the card, you borrow some amount from that company, and you're required to pay back a portion of that amount to the company every month. When a company issues you a credit card, you're given a specific credit limit - the maximum amount you can borrow from the company. If you see inaccuracies in our content, please report the mistake via this form. If we have made an error or published misleading information, we will correct or clarify the article. ![]() Our editors thoroughly review and fact-check every article to ensure that our content meets the highest standards. Our goal is to deliver the most accurate information and the most knowledgeable advice possible in order to help you make smarter buying decisions on tech gear and a wide array of products and services. ZDNET's editorial team writes on behalf of you, our reader. Indeed, we follow strict guidelines that ensure our editorial content is never influenced by advertisers. Neither ZDNET nor the author are compensated for these independent reviews. This helps support our work, but does not affect what we cover or how, and it does not affect the price you pay. When you click through from our site to a retailer and buy a product or service, we may earn affiliate commissions. And we pore over customer reviews to find out what matters to real people who already own and use the products and services we’re assessing. We gather data from the best available sources, including vendor and retailer listings as well as other relevant and independent reviews sites. ZDNET's recommendations are based on many hours of testing, research, and comparison shopping.
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