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They may look identical, but charge cards and credit cards are surprisingly different financial tools. Although both allow you to make a purchase without using cash, there’s a big difference when the bill comes. With a credit card, you can carry—or revolve—a balance and pay it off over time, although typically you’ll incur interest charges to do so. With a charge card, any balance must be paid in full when the monthly statement arrives.

There are also other distinctions to be aware of. Here’s a deeper dive into how each type of card works to help you decide which one is a better fit for your particular needs.

Read More: Best Credit Cards of 2024

How Does a Charge Card Work?

Unlike a credit card, a charge card doesn’t come with a preset spending limit. This can make it more flexible, since it will grant access to the buying power you need even if that amount fluctuates widely month to month.

This doesn’t mean you have unlimited spending ability, though. If you’re planning on making a significant purchase, first contact the issuer to see if they’ll approve the amount you’d like to charge. Ultimately, a charge card can help you be a more responsible shopper, since you’ll know you’re on the hook to pay back your debt in the not-so-distant future.

A credit card allows you much more leeway. It may have a firm borrowing limit, but you’re only required to make a minimum monthly payment on the total amount you owe. While the idea of smaller payments may be appealing, interest will accrue over time, adding to your overall burden, so it’s still in your best interest to pay your card off in full each month.

But for someone who needs extra time to pay down their bill, a credit card could be the better choice. It’s possible to avoid interest charges for a period of time by using a card with an introductory 0% APR offer on purchases. These offers generally last from six months to nearly two years. It’s almost impossible to find this sort of leniency with a charge card.

How Can I Get a Charge Card?

Although credit cards are available even to those with not-so-great credit, a charge card typically requires a good-to-excellent score. That’s because the issuer is taking a bigger risk by assuming you’ll pay your full bill every month and not giving you a preset spending limit. If you have poor or limited credit history, you may want to look to a secured card instead.

American Express is the only major issuer that still offers cards that resemble a traditional charge card. The options currently available to consumers include:

These products have features similar to charge cards, but they also have a feature called “Pay Over Time” available to some cardholders that allows eligible purchases to be treated as they would be on a credit card (up to the Pay Over Time Limit), meaning they don’t have to be fully paid off at the end of the billing cycle and are subject to interest charges*.

Aside from American Express, a few retailers (notably gasoline chains) may offer charge cards that can only be used within their brand, although the majority of these allow you to carry a balance. If you’re eligible for a small business card, there are additional options, such as the Capital One Spark Cash Plus*.

What Are the Key Differences Between a Charge Card and a Credit Card?

There are six key differences between charge cards and credit cards that you should be aware of.

Payments

A credit card requires a minimum payment at the end of each billing cycle, and you can revolve your balance from month to month. A charge card requires payment in full at the end of each month.

Credit Score Required

A credit card can be obtained even with a bad credit score. A charge card requires good-to-excellent credit.

Fees

There are plenty of no annual fee credit cards, but charge cards that are currently available carry a yearly cost of ownership (usually substantial; the fees on the American Express charge cards range from $150 to $695, for example).

Credit Utilization

A credit card has a firm spending limit, and the amount of that limit you use (known as credit utilization) is responsible for about 30% of your FICO credit score. Approaching the limit on your card will likely have an adverse impact on your score.

Since a charge card doesn’t have a limit, your usage of it won’t change your credit utilization.

Options

While there are hundreds of credit cards to choose from (each with its own benefits and drawbacks), the pickings are slim with charge cards.

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Should I Get a Credit Card or a Charge Card?

Choosing a credit card or charge card comes down to your own goals and unique financial circumstances. While charge cards have the advantage of preventing you from overspending and amassing debt, there aren’t many to choose from, and they have high annual fees.

In contrast, there’s a wider array of options when it comes to credit cards (including credit cards for those with bad credit), but it’s much easier to rack up debt by revolving a balance. Even so, a credit card, especially one with a 0% APR offer, can be an excellent option for anyone who needs extra time to pay off a big purchase.

In the end, we can’t provide a hard-and-fast rule for which type of card you should get. By understanding what you’re choosing between, you can take a harder look at your financial situation and the cards currently available to make a better decision for yourself.

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All information about American Express® Green Card has been collected independently by Forbes Advisor