Business charge card vs credit card - What’s the difference?
16 July 2025
3 min read
Charge cards and credit cards both allow you to buy without cash, but they serve different financial purposes. When comparing a charge card vs a credit card, the main difference is that credit cards allow you to carry a balance month to month, whereas a charge card must be paid off in full each month.
What is a business credit card?
A business credit card allows businesses to manage their day-to-day expenses with access to a revolving line of credit, providing flexibility in managing your money.
Unlike a charge card, which requires full payment at the end of each billing cycle, a business credit card enables you to carry a balance from one month to the next, making it easier to handle fluctuating expenses or unexpected costs. You're required to make at least a minimum payment each billing cycle. If the full balance isn't paid by the due date, interest is charged on the remaining balance, which may increase the cost of purchases over time.
Business credit cards can be a great tool for managing short-term cash flow needs, like purchasing inventory, covering payroll, or paying for operational expenses.
What is a business charge card?
Unlike credit cards, a business charge card doesn’t allow you to carry a balance from month to month. The full amount owed is due at the end of each billing cycle, making it a tool for disciplined spending. This requirement encourages businesses to closely monitor their cash flow and spending habits, as they must be prepared to pay off the total balance each month to avoid late fees or penalties. Charge cards can be particularly beneficial for businesses with regular cash inflows that are able to cover expenses quickly.
This type of card is typically used to cover operational costs, such as travel, office supplies, or client expenses, allowing companies to streamline their payment processes and consolidate multiple purchases into a single monthly statement. The key advantage of a business charge card is that it provides short-term financing without the worry of accruing interest, as long as payments are made on time.
What are the key differences between business charge cards and credit cards?
The key difference between a charge card and a credit card is how you pay off what you owe. With a charge card, you must pay the full balance every month, otherwise you will be charged debit interest on the unpaid balance. In contrast, a credit card allows you to carry a balance from month to month, though you'll pay interest on any remaining balance.
Credit cards and charge cards differ in how they manage credit limits and payments. Credit cards have a pre-set credit limit, meaning users can only spend up to a predetermined amount. In contrast, charge cards typically do not have a pre-set limit but require the balance to be paid off in full every month. Since the balance must be paid in full, interest is not usually charged on charge cards, unless the balance is not paid, making them different from credit cards.
Credit cards allow users to carry a balance month to month, however, each month you must pay at least the minimum payment. This flexibility means that if the balance isn’t paid off entirely, interest charges will accrue on the remaining balance.
Should I get a business charge card or a business credit card?
Benefits of business charge cards:
One benefit of charge cards is that there is typically no pre-set spending limit for purchases, which can allow your business to make larger purchases.
Another benefit is that since you have to pay off the balance in full every month, there are no interest payments, which can save your business money as long as you pay off the full balance every month.
Benefits of credit cards:
Credit cards give you more flexibility with cash flow since you don't have to pay off the full balance every month. This means you can carry a balance and make smaller payments if necessary, whilst paying interest on any remaining balance. This can be useful for covering unexpected expenses.
Disadvantages of business charge cards:
Since the balance must be paid off in full each month, they are not suitable for extended borrowing. Missing a payment on a charge card can result in late payment fees. There is also typically a monthly fee for a charge card which you would still receive even if the card is not being used.
Disadvantages of business credit cards:
Credit cards charge interest if the balance is not paid off in full each month. These interest charges can accumulate over time if only the minimum payment is made. If you only make the minimum payment each month, it will take longer and cost you more to clear your balance. Credit cards also come with a pre-set spending limit.
Other things to consider
Evaluate the annual fees, interest rates, and potential late fees for each option. Charge cards may offer more flexibility but at a higher cost, while credit cards provide more borrowing options, potentially at the expense of accruing interest.
Finally, consider the eligibility criteria for each card. Charge cards are typically not available to sole traders or unincorporated organisations.
To conclude
- A business credit card allows carrying a balance month to month with interest, requires minimum payments, and is useful for cash flow management.
- A business charge card comes with no interest if the balance is paid in full monthly, requires full payment and offers flexible credit limits.
- Key difference: Credit cards allow you to carry balances, while charge cards require full payment each month.
Legal Disclaimer: Please ensure you assess your business’s financial needs before applying for any financial product. Your application is subject to status. This means we’ll complete credit checks and an assessment of your financial circumstances.
Explore your options and find the best fit for your business with a business credit card or a business charge card.