Charge card explained: How they work, pros, and differences from credit cards

Charge Cards Explained: How They Work, Pros, and Key Differences From Credit Cards

Like credit cards, charge cards are a vital part of your business operations, serving as a key tool for managing cash flow, paying suppliers, covering recurring expenses, and supporting your company’s growth. While credit and charge cards are often used for similar purposes, their functions and their impact on your finances differ. Understanding how charge cards compare to credit cards can help you make smarter choices when it comes to your business’s spending and growth plans.

In this guide, we’ll break down how charge cards work and what sets them apart from credit cards. The main distinction can be broken down to repayment: credit cards let you roll over a balance from month to month, often with interest, while charge cards require you to pay the full amount by the end of each billing cycle. That structure turns charge cards into a disciplined yet flexible way to manage cash flow, helping you cover expenses between cycles while still giving you access to the same card networks and payment tools your business already relies on.

Keep reading to explore how charge cards function, how they stack up against credit cards, and why modern platforms like Slash are combining the strengths of both through innovative financial technology services:¹

What is a Charge Card?

A charge card is a type of payment card account, like a credit card or debit card, that allows you to make purchases throughout a billing cycle. Charge cards uniquely require the card balance be paid in full when the due date or the end of the billing cycle arrives, depending on the time frame set by your card issuer.

Unlike traditional credit cards, which allow you to make a minimum payment on your balance and carry the rest as rolling credit, charge cards do not let you carry debt from one billing cycle to the next. Rather, charge cards require you to stay disciplined and pay in full each month or billing period.

Charge cards can also be mistaken for debit cards, but the two work very differently. Debit cards spend money that’s already in your account, whereas charge cards extend a line of credit you’re required to pay off in full by the billing deadline.

Examples of charge cards include the Slash Platinum Visa Card, the American Express Gold Card, and American Express Platinum Card, which may differ in billing cycles available (1, 30, 60-day periods or other), annual fees, or membership rewards.

Charge cards can not only give business owners access to easier payment options, but also can help you build credit and demonstrate a reliable payment history, while also giving you access to card and cash rewards, like cashback.

How does a charge card work?

On the surface, a charge card works similarly to other payment card options: you swipe, tap, or enter your details for purchase at an e-commerce site or store kiosk. The main differences emerge in how balances are managed and reported:

1. Application and approval

Like with credit cards, approval for cards depends on your credit scores or credit history. Depending on the card issuers, such as American Express or Capital One, you may also be considered based on your business’s revenue or financial health. While Slash will ask for the same basic documents as a traditional bank, our automated, user-friendly system makes approval more streamlined for small business owners building and scaling their companies.

2. Spending

Charge cards are commonly used for business expenses like software subscriptions, vendor payments, or travel. Unlike credit cards with a preset credit limit, many charge cards operate with no preset spending limit, though issuers still monitor what you can realistically repay.

3. Repayment in full

At the end of each billing cycle, the entire balance must be repaid. Unlike credit cards, there’s no option to carry debt from month to month. If you don’t pay, you will likely face late fees, potential damage to your credit utilization ratio, and overall credit score. This could potentially impact your ability to access credit in the future and should be approached with careful consideration and financial discipline.

4. Rewards and perks

Many charge cards come with reward points or cashback offers. For instance, the Slash Platinum Charge Card offers up to 2% cashback on all spend, while the Amex Gold Card offers points on dining, and the Amex Platinum Card earns points on travel.

5. Impact on credit

Because card issuers report your payment history to major credit bureaus, how timely and effectively you pay your charge card will impact your credit. Ensure you make timely payments to help build your credit. Late or missed payments can damage your score and trigger additional fees and charges.

Charge card vs. credit cards: what’s the difference?

While they may look alike, charge cards and credit cards are built differently:

Charge cards are a more accessible option, offering disciplined repayment, while credit cards are more flexible but may involve incurring interest payments or debt.

Modern platforms like Slash combine the two models: the Slash Platinum Visa Charge Card includes the repayment structure of a charge card, while Slash’s platform, software tools, and treasury partnerships offer access to working capital, customized spending control, and real-time spend analytics.⁶

Charge cards: benefits and drawbacks

Charge cards can be extremely powerful spending tools for businesses; however, it’s essential to ensure they’re the right fit for your business before applying.

Benefits

• No interest charges if balances are paid in full
• Builds credit history through on-time repayment.
• May include rewards and membership perks.
• Repayment structure can be beneficial for young businesses and startups.
• Useful for predictable, recurring monthly spending.

Drawbacks

• Requires full repayment each month
• Often higher annual fees
• Fewer issuers compared to credit cards
• May hurt cash flow during slow revenue cycles
• Lack of access to rolling credit or working capital

Smarter charge card alternatives with Slash

Modern businesses need flexible, transparent, and automated spending tools. Traditional cards, while effective payment options, often fail to meet the unique needs of modern businesses seeking accessible banking, spending, and financial management solutions.

With Slash, both new and established companies can access a range of products and services, including charge cards, intelligent analytics, and spend management tools.

Here’s how Slash goes beyond simple card offerings, providing charge cards with competitive rewards with expert-built and industry-tailored financial tools suitable for your modern business needs:

• Up to 2% cashback charge cards.
• Flexible working capital to help with cash flow.
• Real-time expense tracking and merchant-level spend controls.
• API and accounting integrations with QuickBooks, Xero, Plaid, and more.
• Instant and unlimited issuance of virtual cards for teams, multi-entities, or company divisions.

Slash enables companies to manage repayment cycles, track transactions, and optimize spending, all while earning competitive rewards.

Get started and learn more about the Slash Platinum Visa Charge Card and software features at slash.com.

Frequently asked questions

What are the best charge cards for businesses?

Slash provides an excellent charge card option, offering high cashback and flexible tools tailored to modern businesses.

What industries benefit most from charge cards?

Businesses with consistent and recurring expenses, such as consulting firms, SaaS startups, marketing agencies, and companies with high travel spend, may find charge cards helpful. Additionally, young businesses and startups may find charge cards more accessible as options without interest or debt penalties.

How can I get a charge card?

You can apply directly with an issuer or through financial platforms like Slash. Expect the process to review your credit score, credit utilization, and payment history.