Having the power to use your credit or charged cards for hotel reservations, air flights, and vacation expenses are only some of the benefits of getting access to virtual money. In more ways than one, these credit lines allow people to enjoy better things in life through repayment plans. Because of these, more consumers prefer to use credit and charged cards for daily transactions and express banking needs.

Credit and charged cards both offer consumers a postponed payment scheme. Although they serve almost the same purpose, credit cards and charged cards should not be used and seen interchangeably. To know which card will suit your current financial needs, consider the individual benefits offered by each card.

Knowing the Difference

Charged cards offer a shorter repayment period, often in a span of one month. Unlike with credit cards, charged card holders have to pay the balance in full and not in minimal amounts. Failure to do so may incur a penalty charge or cancellation due to breach of contract. Another difference is that the interest and balance are not carried over the next month. Hence, no billing cycle is involved in using this type of card. You also need to clear out all your balance charges within one month or once you receive the account statement. Simply put, charged cards are non-revolving credits used to manage your finances more efficiently.

Who Uses Charged Cards

Charged cards are popular among large business companies and government organizations. By using charged cards, they get access to detailed accounts of any purchase. It also limits their use of petty cash and cheques. In case of business emergencies, charged cards also help provide immediate funds for day-to-day operations or during special conditions.

People who use charged cards are employees who carry out special tasks for the company such as consultants, managers, procurement officers, or sales personnel. Others who choose to have one, even if not needed for work, usually recognize the perks of having charged cards for discounts and quick purchases.

What You Need to Know About Charged Cards

Future cardholders reserve the right to full disclosure during application. This means that banks and other lenders should help customers understand the terms of their credit lines. As an applicant, you should know the real cost of using charged cards including the interest, penalty charge, and credit limit. The lender should also take time to discuss the following:

• Card and application fees before the charged card is issued or used
• Amount or percentage fee charge for every transaction
• Cash advance terms and penalty charges
• Payment for annual fee or membership
• Credit period for clearing out all unpaid amounts

You have the right to cancel the use of charged cards by refusing to renew the contract. Before asking for a renewal fee, the lender should also give you time to consider other credit options. Should you find the use of charged cards beneficial, just make sure that you don't have any pending balances so you won't have any trouble with quick approval.