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I tend to almost always use varchar (or nvarchar if I expect to support multiple languages). If I did use a char is would be in cases were all data would be close to or exactly the length of the field. It is my understanding that if the values are variable, then a Varchar is faster (because exactly the data that is needed is sent over the wire). Usually if I want to encode data, I use an enum and store an int in the database, which is way faster than a char.
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