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Charge & Debit Cards |
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Using a charge card is similar to using a credit card in that you are borrowing money. A big difference with a charge card, however, is that you are required to pay the balance owed within thirty days. If you do, you will not be charged any interest on what you've bought.
If you don't pay the amount you owe on time, you will incur late fees, letters and phone calls. In addition, your card might be cancelled and your credit rating will be impaired.
The charge-card company makes its money through annual fees to customers — although you might be able to get that fee waived — and through transaction fees to the merchants which accept the card. The most well-recognized of these companies is American Express.
A debit card, although another piece of plastic, is not the same as a charge or credit card. With a debit card, the amount you can spend is limited to the monies you've already placed in the bank — you can only spend what you already have. In effect, a debit card is just another form of cash in your wallet.
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