Types of Credit Cards

Types of Credit Cards

There are hundreds, if not thousands, types of credit cards spread across many financial institutions, lenders, and stores. Choosing a credit card best suited for your needs may be a challenging task to accomplish. With benefits, welcome bonuses, interest rates, and limits, many factors affect your decision. A credit card can go from the basic, no apparent advantage card, to the premium, all-inclusive, with plenty of perks card. Before settling for one, it is always better to take your time and examine all the choices.

The Standard Card

The common or standard credit card is often sought-after by many consumers, as it does not present any complicated attributes or rewards. They are a reasonably easy cash advance to examine and understand. If you are interested in spending to earn rewards or getting into the complex card benefits, then this is the card for you.

With a set card limit, customers are expected to have a recurring balance on their card for them to use anywhere they like. Cardholders can make purchases with the card, and then find their balance refilled after making the payment. Just like any other credit card, there is a finance charge to factor in, and most banks apply these charges to the outstanding balances by each month. There is a minimum payment that customers must respect and pay every month to avoid penalties.

Balance Transfer Credit Cards

The benefit of balance transfer credit cards is their low introductory rate on balance transfers for a limited period of time. You can indeed perform a balance transfer between most credit cards, but those hold a rather substantial rate that may not be of interest to many customers. The balance transfer credit cards allow the customer to save money on high-interest rate balances, with the freedom to transfer the owed amount to this card.

Balance transfer credit cards can often go as low as 0% rate, but this comes with each transaction fee. Make sure to perform the necessary research to locate the lowest promotional rate along with the period. Keep in mind that to qualify for low rates, you must hold a good credit score.

Rewards Credit Cards

As the name suggests, Rewards credit cards are cards that allow consumers to earn rewards on their purchases.

The rewards can be in the form of cashback, point, and travel miles. Many people prefer the convenience of cashback rewards, while avid travelers prefer to add miles to their tickets. The travel rewards can offer anywhere from miles to free flights, hotels, and other travel perks. Points are often sought-after by consumers who are loyal to one store or another, where they can redeem their reward points.

Student Credit Cards

Intentionally designed for college students, student credit cards are currently meant for young adults currently suffering from a tight financial situation. These consumers have little or no credit history, meaning that they may have an easier chance of getting approved.

These credit cards generally present perks such as rewards and low-interest rate balance transfers. Nonetheless, an essential requirement for students to qualify for this credit card is to be enrolled in a four-year university.

Charge Cards

Charge cards are ideal for those looking for no limit on their spending. With that, however, balances are set to be repaid by the end of each month. This means that there are no minimum monthly payments since the balance has to be covered in full. Late payments are met with fees, charge restriction, and often card cancellation.

In order to qualify for a charge card, borrowers must have a pristine credit history.

Secured Credit Cards

For borrowers who do not have a credit history or suffer from a low one, secured credit cards are the way to go. However, card applicants must place a security deposit amount on the card before getting it. The amount limit of the credit card is determined based on the security deposit set. Similar to regular credit cards, cardholders are expected to make monthly payments on the secured credit card.

Subprime Credit Cards

Subprime credit cards are reliable cash options for bad credit score holders, however, these cards generally hold a high-interest rate and fees. Approval for these cards are typically fast and allow bad credit score holders to take advantage of the cash fast.

Nonetheless, the Federal government has assigned several rules and regulations for these cards, including the card issuer’s fees.

Prepaid Cards

Similar to debit cards, prepaid cards allow the cardholder to deposit cash into the balance to conduct purchases. When a purchase is made using the card, the amount is withdrawn from the card’s balance. The spending limit of the card is not renewed until the card is replenished. The card does not exhibit a minimum payment or finance change, as the balance will be withdrawn from the available cash in the card. The main difference between prepaid cards and debit cards is that the card is not attached to the checking account. They are ideally used to help customers stay within their budget.

Limited Purpose Cards

The use is limited to specific locations and stores. Specific stores, such as Target, issue their own limited purpose credit cards where customers can enjoy rewards based on purchases made in their stores. These cards, similar to regular credit cards, have minimum payments for each month along with finance charades. Store credit cards and gas credit cards are the most used limited purpose credit cards among consumers.

Business Credit Cards

Business credit cards, as their names indicate, are meant for business uses only. They allow business owners, big or small, to keep up with their business improvement and operations without any hassle. This is also a great way to keep your personal and business finances separate.

Nonetheless, when requesting a business credit card, your personal credit history is issued for examination to determine creditworthiness. Types of business credit cards can vary from standard business cards to charge cards. Small business owners find these cards extremely reliable to replenish their inventory and forgo any late payment fees on their liabilities.

Essential Tips for borrowers

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