Charge Card vs. Credit Card: Which Is Better For SMBs?

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Looking for a business card for your small business? We compare charge cards vs credit cards to help you figure out the best option for your company.

When choosing a business card, your top considerations would probably include annual fees, credit limits, and rewards. You might have a few credit cards on your radar, but have you heard of charge cards? While people might refer to both interchangeably, there are variations between the two that might make a wealth of difference when managing cash flow for your business. Now you might be wondering, charge cards vs credit cards—what’s the difference?

Comparing the Two: Charge Cards vs Credit Cards in Singapore

While both charge cards and credit cards allow you to make purchases on credit, the key difference between charge cards and credit cards is when, and how much you’ll be charged each month.

Credit cards generally require minimum monthly payments each month. Remaining balances can be rolled over to following months. With charge cards, you’ll have to pay the full balance amount owed at the end of each billing cycle.

Did you know? With Spenmo, you can generate unlimited corporate cards to your employees so that you can track their marketing, SaaS, and procurement expenses

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Now that we’ve gotten the basics down, let’s delve deeper to find out if the charge card or the credit card best suits your business needs. To help you make a decision, we’ve analysed charge cards vs credit cards on five different fronts:

Here’s a handy table comparing the two:

Charge CardsCredit Cards
You can purchase something, and you’ll be billed later. It can boost the spending power of your business, which could give you more flexibility.It has a longer possible repayment period vs. charge cards. It’s a better option especially if you pay your dues on time.
You need to pay the balance in full on your due date. If you don’t, it might affect your future financial transactions negatively.It gives you the opportunity to defer payment and improve your business’ credit history.
Offers better rewards than credit cards, but usually requires excellent credit to qualify.Some credit cards are tailored specifically for specific business expenses such as marketing and SaaS spend, which could help your company gain more reward points.
Balances cannot be carried over from month-to-month, and there’s no minimum payment, annual percentage rate, and interest rateExpect sudden increase in your interest rates even though you pay your dues. It could be detrimental for your business.
Annual fees are usually higher than average business credit cards.There are a wide range of credit cards on the market. Depending on your business needs, you could choose credit cards that don’t have annual fees.

Repayments: Charge Cards Have No Variable Repayments

Here’s how most business credit cards work: you make purchases throughout the month, and receive a statement with your bill each billing cycle. Depending on the amount of cash your business has on hand, you could either repay your credit card in full, or make a minimum repayment.

Though there isn’t a base minimum amount, most banks charge at least S$50, or 3% of the total outstanding amount, whichever is higher. As long as you make the minimum payment each month, you won’t be charged a late fee by credit card companies.

A credit card might be ideal if you’re currently short on cash flow. Having a credit card means that you can prolong your repayment period, freeing up space for you to invest in more pressing projects.

We know that variable payments sound pretty ideal, but they should only be used as a short-term strategy. Every credit card has an annual percentage rate (APR), which is essentially the interest rate. Any remaining balance owed is carried forward to the next month, and subjected to the APR—which could be pretty high.

On the flipside, we have charge cards. Charge cards don’t offer variable payments. Instead, all purchases made on credit have to be repaid by the end of each billing cycle.

Here’s the tricky part: late payments or failing to make payments means you’ll be slapped with some heavy penalties. These include hefty late fees and a blocked account—you might be prevented from making payments until your outstanding balance is accounted for.

Verdict: If you’re a small business looking for repayment flexibility, credit cards might be a better option. But some business owners still prefer charge cards on the basis that it fosters discipline in terms of repayment.

Whichever you decide to go with, we recommend paying off your card’s statement balance in full each month to avoid additional costs.

Credit Limits: Charge Cards Have No Credit Limits

Overborrowing isn’t a good thing for you or banks. That’s why credit card issuers set credit limits. These are usually income dependent.

For example: if your annual income is below S$30,000, your credit limit is capped at twice your monthly income. That limit increases to up to four times your monthly income if you earn between S$30,000 to S$120,000 annually. There’s usually no credit limit if your monthly income exceeds S$120,000.

On the other hand, charge cards have no preset spending limits. As long as you’re able to fork out the cash at the end of the month, spending limits are virtually nonexistent. But the caveat is that the true credit ceiling is based on your previous spending habits, income and creditworthiness—which means there technically is a maximum spend you could hit.

Verdict: Most corporate credit cards come with personalisable credit limits. This is extremely useful for companies that provide corporate cards to every employee, as it helps to monitor company spend more efficiently.

Usually, finance directors set spending limits for each department. These limits are then laid out in the company’s expense policy, which outlines how much and what employees can spend on.

Accessibility: Credit Cards Are More Accessible than Charge Cards

At the beginning of this article, we mentioned that credit cards were probably more well-known amongst business owners. This is due to the variety of corporate credit cards in the market.

They range from overall business credit card offerings, to corporate cards that are tailored for specific areas of business. Some of the best business cards in Singapore include the DBS Visa Platinum Business Card and UOB Platinum Business Card.

You might be wondering why you haven’t heard of charge cards. Well, that’s because charge cards are the more exclusive cousins of credit cards. As charge cards do not have spending limits, charge card issuers generally choose potential clients based on their ability to keep up with payments in order to make sure they’re accountable.

Unlike credit cards which do not require stellar credit scores, cardholders of charge cards tend to have good credit and are usually sought out personally by card issuers. This explains why charge cardholders are usually people with higher incomes.

In Singapore, credit scores are determined by the Credit Bureau of Singapore (CBS). You’ll be given a four-digit number that ranges from 1,000 to 2,000 based on your past payment history. The higher the score, the more credible your credit.

If you are curious about your eligibility for a charge card, you could review your current credit report from the CBS for a fee of S$6.

Verdict: On a whole, credit cards are a more accessible option for business owners looking to separate business and personal finances. They’re also more widely accepted as payment options worldwide.

It’s pretty difficult to find charge cards off the market in Singapore, but American Express currently has three charge cards under their belt that you could apply for——the American Express Personal Card, Platinum Card, and Gold Card.

Perks: Charge Cards Have More Exclusive Privileges

Alt: exclusive luxury travel privileges for business charge card and credit cardholders

With a more affluent clientele, it makes sense that charge cards take the lead when it comes to rewards. Let’s take a look at the American Express Platinum Charge Card’s privileges:

exclusive luxury travel privileges for business charge card and credit cardholders

  • Cardholders enjoy complimentary access to over 1,000 airport lounges worldwide
  • A 24-hour global concierge service to help you with everything from flights to restaurant reservations
  • No expiration date on membership rewards points
  • Up to 50% savings on food at selected luxury restaurants

Charge cards offer a wide range of loyalty discounts, travel miles, and exclusive access to member-only areas globally. But these days, credit card issuers offer a myriad of perks, enough to rival that of charge cards.

The Amex Platinum Credit Card offers similar dining rewards for cardholders, along with complimentary travel insurance. Other credit cards on the market also match these privileges, along with annual insurance coverage to prevent employee misuse.

Verdict: Don’t jump the gun just because of card privileges. To make the best card choice for your business, consider the perks that would benefit your company the most.

The best way to do this is by considering company expenses when budgeting. For example, if you’re a business that invests a lot into marketing and advertising, keep an eye out for corporate cards that offer cash back on those expenses. Choosing the right card could help your company save costs in the long run!

Annual Fees: Charge Cards Have Exorbitant Annual Fees

One of the deal breakers when it comes to choosing a business card is the annual fee. Given it’s exclusivity and target audience, maintaining a charge card is definitely on the pricier side compared to a credit card.

The American Express Platinum Charge Card costs a whopping S$1,712 annually. That’s an expense that might not be worth it for smaller businesses that have no need for the luxury travel or dining privileges that charge card holders have access to.

Credit cards on the other hand have annual fees that are more palatable to small and medium businesses. Annual fees for most cards on the market range from S$0 to S$300 per year, which is extremely affordable. Here’s a breakdown of the annual fees of the most popular business cards available:

Business Credit CardAnnual Fee
DBS Visa Platinum Business Card #S$192.60
dbs-card 
UOB Platinum Business Card #S$180
uob-card 
OCBC Business Platinum Card #No Fees
ocbc-card 
Amex Singapore Airlines Business Credit Card #S$299 (first year waived)
amex-card 
Maybank Business Platinum Mastercard #S$180 (first two years waived)
maybank-card 

Verdict: It’s important for you to consider if the credit card or charge card chosen is worth the expense. If you’re running a small local business that doesn’t require frequent travel, choosing a business credit card with amazing travel privileges might be a little unnecessary.

Annual fees might not seem like much to pay at the beginning, but could really add up over time for smaller companies. At the end of the day, managing your business cash flow requires you to weigh your short and long-term goals carefully.

What should I look for when looking for a business credit card?

Choosing the best card for your business can be a little daunting given the many types of cards available. We’ve narrowed down three main features to look out for when picking the most compatible card for your company:

  • Annual Fee: Consider the expenses of your business, and make sure that the annual fee is justified by the privileges and needs of your company.
  • Rewards: Are there any cash back perks or supplier partnerships that can benefit your business in any way?
  • Customer support: Great customer service can help make running a business a walk in a park.

A good business credit card can help to take the weight of daily business operations off your shoulders. Learn how to use your business credit card to its fullest potential with Spenmo.

Spenmo’s Credit Card Top Up feature is a seamless way to pay your salaries, invoices, and manage your cash flow all in one dashboard. It’s easy: simply integrate your business credit card, and allocate money to your team through Spenmo’s digital cards.

Set spend limits, increase visibility, and easy reconciliation across all your business expenses. Find out more about Spenmo here.

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