Not to be confused with a credit card,
a charge card, is a means by which to purchase products and services on
short-term credit. The most recognized company dealing in charge cards
is American Express. Some other companies, including Diner's Club. In
certain situations, MasterCard has also been trying to build a presence
in the charge card market.
A charge card differs from a credit in a
number of important factors. Understanding these factors is critical
before using such a card. While many appreciate credit cards because
they have the opportunity to make purchases and pay back the balance
over time, often months or years, the charge card offers no such
generous time frame. A charge card must be paid back by the due date of
the next billing statement in full.
Unlike a credit card, a charge
card usually comes with no preset maximum credit line. However, if the
charge card issuer believes you may be unable to pay the company back
when a statement is issued, charging privileges could be suspended. So
while there is no preset limit, there is certainly a limit that a
company will allow a consumer to charge before cutting off privileges.
This is done purely as a protection for the company.
There is usually no interest associated with a charge card because
there is no long-term debt. Charge card companies make their money in
usually one of two ways: by charging for the use of the card and
charging penalties in the event that a charge card balance is not paid
or is not paid in full. Often times, the penalty on a balance not paid
in full can be as much as 5 percent.
However, while charge cards often make it a general practice to
collect the entire outstanding balance each month, some are starting to
make exceptions to this rule. For example, American Express, in some
cases and if a charge card holder enrolls, will allow an individual to
charge travel expenses and pay them back over time. In addition, if
single purchase is more than a preset benchmark, usually $200 US
Dollars, that amount can also be paid back over a period of time. In
this way, charge cards are very similar to credit cards.
Still, before making a major purchase or putting all travel-related
expenses on a charge card, it is important for the cardholder to make
sure these are options. If not, the cardholder could be left with a
large balance and be assessed a significant penalty.
Subscribe to:
Post Comments (Atom)
-
Working with Groups of Worksheets Grouping your worksheets can help improve consistency and save time. Once sheets are grouped, you can...
-
A mobile phone is a wireless electronic device used for telephone and multimedia communications. The term "mobile phone" does n...
-
Challenge: The customer – a Fortune 500 organization, who is in the business of theme parks, with thousands of acres of plants, g...
No comments:
Post a Comment