“Isn’t charge card just another name for a credit card?” you might ask. Actually, it’s not. You must pay your balance in full every month on a charge card; it’s merely an alternative to carrying cash for purchases. You don’t pay interest on your purchases when you use a charge card, but if you don’t pay in full at the end of the month, you will be subject to late fees and other penalties, which could include losing the privilege to use your card until payment is made in full. Because you pay your balance each month (got that part?) there’s no pre-set spending limit on a charge card.

For trivia buffs, the first charge card was issued in 1914 by Western Union and was printed on paper. In 1957, Frank McNamara invented the Diners Club card, a charge card now issued by Citigroup and accepted in most places that accept MasterCard. In 1959, American Express issued embossed plastic charge cards, and remains one of the most recognizable brand of charge card.

A credit card, as opposed to a charge card, is a revolving line of credit. Your credit card issuer will set a credit limit based on your credit score and credit history. You can make purchases, pay bills, or take out cash advances up to that limit, according to the terms of your credit agreement. You’ll pay interest on the money you borrow — if you make only your minimum payments each month, this could add up to thousands of dollars until you’ve paid off your purchases.

Understanding the difference between a charge card and a credit card, a charge card may be the best choice to manage your business purchases. Several choices exist, but American Express still offers the widest variety of business charge cards with the best perks and benefits for CardMembers.

CreditShout.com ranks the American Express Plum card as the best charge card for businesses. We provided an American Express Plum Card Review earlier this year, but let’s cover some of the highlights of this card.

The Plum card, offered by American Express OPEN, is a charge card that provides you with trade terms — that is, Net-30 or Net-60 on purchases. If you pay off your balance within 10 days of your statement closing date, you’ll earn 1.5% cash back on the purchases you made that month.

If you are a large business, that money can really add up. Since you must have six-figure revenue to qualify for a Plum card, if you put all your monthly expenses on your Plum card, you’ll enjoy considerable savings. How much? If you charge a mere $1,000 a month, you’ll save $180. If you charge $250,000 per month (for instance, you put all your utilities and office expenses on the card, plus you use it to pay your payroll company), you’ll get $27,000 cash back — that’s enough to pay a mid-level employee’s salary for a year.

If you pay 10% of your balance by your due date, you can defer payment of the rest for 60 days without penalty.

The American Express Plum Card also lets you choose your statement closing date — the beginning, middle or end of each month.

Like other cards in the American Express family, the OPEN Plum card offers many benefits desirable to business owners, including:

• 24/7 customer service
• car rental loss and damage insurance
• extended warranty
• fraud protection guarantee and identity theft assistance
• online statement and billpay
• travel accident insurance

Fees
The American Express OPEN Plum card has a $185 annual fee, waived the first year, which is considerably lower than many other cards from American Express. Business owners are entitled to a free second card for an employee, while additional cards have a $45 annual fee, making the American Express Plum card an affordable option for business owners with employees who travel.

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