The Different Types of Credit Cards
There are a wide variety of different types of credit cards. So which one is best for you? Glad you asked. In this review we will discuss several types, not name brands of cards. These types of credit cards range from simple cards to premium cards with many advantages. Take note that your card will be of great help to you so long your card balance will be kept in check.
Standard Credit Card
If you want a card that is not complicated and not interested in rewards, choose this type of credit card. A standard credit card allows you to have a revolving balance and a certain credit limit. They are also relatively easy to understand. With a standard card you can increase your credit as long as you make ontime payments. Also don’t fall victim to a rolling balance. Pay your card off before the end of the billing cycle to prevent interest charges.
Travel Credit Cards
Travel credit cards earn points aka miles each time you buy something. The standard earning rate is 1 to 2 points per dollar spent, and many cards give you extra points for certain purchases, particularly travel expenses. The value of a point depends on the card that earned it and how you redeem it, but a good rule of thumb is to assume each point is worth an average of about 1 cent.
Your points accumulate in a rewards account, where you can use them to pay for travel. Most cards let you book travel directly using a portal similar to those at online travel agencies or on airline and hotel websites, but instead of paying cash, you pay with your points. Depending on the card, you may also have the option of booking travel any way you want, paying for it with the card and then cashing in your points for a credit against those expenses.
Travel credit cards fall into two main categories: general-purpose and co-branded.
• General-purpose travel cards are issued by a credit card company and are not directly tied to any particular airline or hotel. They earn points in the issuer’s own program, These points are a lot more flexible, as you can use them to pay for a range of travel expenses, including flights on any airline or stays at any hotel. However, they don’t offer the airline- or hotel-specific perks of co-branded cards.
• Co-branded travel cards carry the name of an airline or hotel chain. The rewards you earn on the card can typically be redeemed only with that brand (or maybe its partners). Co-branded cards limit your flexibility, but because they are issued in partnership with an airline or hotel, they can give you special perks, like free checked bags or room upgrades.
Airline Credit Card
Airline credit card – this type of card is one of the most common cards that most people own. A number of airlines are so keen to make use of this card, especially if you like to fly to different destinations. And most of these cards, will offer you to fly for free or at a discounted price at different partner airlines. Airline credit cards differ from travel credit cards. Airline credit cards can provide priority check-in and boarding, a free checked bag and airport lounge access. You can also earn elite status on airlines.
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Balance transfer Cards
Balance Transfer- if you were to transfer your balance from a card and into a card that does not usually offer a zero percent balance transfer, then you will gain a substantial interest rate. So if you are looking to transfer your balance to another card, check for any card companies that can offer you the lowest possible rate. Also check to see if there is an associated balance transfer fee. Make sure to see the terms of the interest rate. Some have zero percent, but only for a limited time. This can be great to shift debt from a higher interest card to a zero or lower interest card. It wil give you time to pay it down with less interest. Just remember, make this a priority to pay off in the low interst rate time period, or you will fall into a never ending debt cycle.
Secured Credit Card
Do you have bad credit? Or no credit? Then this could be the card for you. A secured credit card requires you to put down a deposit, securing the funds you wish to borrow. If you put down a deposit of 500 dollars, you have a limit of 500 dollars. This card is generally used for short term to build your credit. Secured credit cards are reported to the 3 major credit bureaus. Secured credit cards are usually an option for people who have no credit history or whose credit rating has been damaged.
Good credit takes time to build, so use this card to make on time payments to build your credit history. Make sure to pay off your card in full each month so that you do not carry a balance.
Subprime Credit Cards
These cards usually come with high interest rates, but approval is often quick, even for those with a poor credit rating. Credit rating required for these cards are typically between 580 and 669. Subprime credit cards are one of the worst credit card products, and the terms can be confusing, especially if you don’t know them. These cards come with a quick approval rate, which makes them appealing. But be aware, these have high interest rates. These cards can get you into trouble. You would be better off to get a secured credit card and improve your credit. That you you can qualify for a better type of card and get out of the debt merry-go-round.
Prepaid Cards
Prepaid cards are just that. Cards that you have pre-loaded money on. It is different from a gift card as you can go to an ATM and get money out of a prepaid card. You can also get money back from a merchant. A gift card you cannot get money from an ATM or money back from a merchant.
Prepaid cards can be useful to prevent against fraud. A prepaid card is not linked to you or your banking information, you can use this type of card to prevent data theft.
Business Credit Card
Don’t let the word business confuse you. A business card is specifically designed for business use. It can help grow a business as far as future credit terms are concerned, but just like a standard credit card, you will want to pay it off every month, before the end of the billing cycle to boost your credit. You can accrue points and it is useful to seperate business expenses from daily espenses.
An entrepreneur has a variety of business card options, such as a business card for gas, a business credit card and a business debit card.
Personal credit history is taken into account as credit card issuers hold a person accountable for a credit card balance.
Cash Advance
This is benefit or rather a potential function of a credit card, not a type of card itself. The reason I added this to the list is I have been asked about it almost every time credit cards are discussed.
A cash advance on a credit card can be done on a wide variety of cards with a wide variety of stipulations and interest rates. So before you opt to do this call your credit card company to make sure you understand what rate you are getting yourself into. A cash advance has a higher interest rate due to the fact that people that take cash advances are more likely to default on payment. I would urge you to find a better method of borrowing money as this one can ruin your credit if you are unable to pay off the balance by the next billing cycle.
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