What is the difference between a charge card and a credit card? A charge card has zero interest while a credit card has high interest. A charge card is issued by a bank while a credit card is issued by a merchant. A charge card has a revolving line of credit while a credit card is paid off each month. A charge card is paid off each month while a credit card has a revolving credit line.
The correct answer is: A charge card is paid off each month while a credit card has a revolving credit line.
A charge card requires the full balance to be paid off each month, meaning the cardholder cannot carry a balance from one month to the next. On the other hand, a credit card allows the cardholder to carry a balance and make minimum payments, with interest charged on the remaining balance. With a credit card, the cardholder has the option to pay off the balance over time, within the predefined credit limit.