Credit cars are of various types, every one has to select credit cards on the basis of the pros and cons of each type of credit card and at the same time the nature of use.
This article gives an insight into the several types of credit cards available in the market
Today, credit card customers enjoy more options and choices than ever before. To gain new customers, credit card companies compete by offering new services and cards to customers. No matter what your needs, chances are good that there is a card out there that would be ideal for you. If you are looking for the right card, you can begin by considering the many types of cards available to you:
Low Interest Credit Cards
These types of credit cards offer very low interest. In some cases, these cards just charge a few percent interest. The reasons for this are numerous. In most cases, the low interest rate is for a limited time only.
After a set number of months, you will begin paying higher interest rates. In some cases, low interest credit cards are not really credit cards at all – they are debit cards linked to a low-interest loan such as a line of credit.
Check your agreement to find out what type of card you have. If you need to consolidate debts or if you like the idea of having low interest for a while, this type of credit card can be perfect for you.
Instant Approval Credit Cards
These cards are really a product of our fast-paced society. The idea behind this type of credit card is that once you fill out your application, you will be told whether you are approved or not right away. The approval process only takes a few minutes. Instant approval credit cards are very popular online and applicants can apply via the internet or over the phone.
If you are very impatient or need credit right away, these types of cards can be for you. However, you should be aware that these cards do not guarantee that you will be approved right away – sometimes, more time is needed to process your application. Another drawback to these cards is that they rely heavily on your credit score. If you have poor credit or any extenuating financial circumstances, these types of cards may not be for you.
Balance Transfer Credit Cards
Balance transfer cards is a type of temporary low-interest card that is meant to help you consolidate your debt. They work this way: if you have several credit cards with a balance, you can get a balance transfer card. You then transfer all your credit card debt onto the new card and work to pay it off. Since the new card has a low interest rate, you can quickly repay your bills.
If you are in debt, a balance transfer card can be a great way to get out of debt. It offers the convenience of one bill and low rates. However, some cards have high fees. Also, if you run up your other cards after consolidating your debts or if you are unable to pay off your new card in the limited time before the low interest rate increases, you may find yourself even more in debt than before.
Rewards Credit Cards
Rewards credit cards offer you points, rewards, or bonuses for every cash purchase made with your credit card over time. As you accumulate rewards or points, you can redeem your bonus for entertainment events, purchases, travel, and other fun prizes.
Some cards even offer customers extra automatic-enter sweepstakes and draws. Each time you use your card, you are entered into a draw to win specific prizes.
These types of cards are really a marketing tool for card companies. Companies know that customers love rewards and prizes and so offer these enticements to lure customers. The major advantage of these cards is that they can help you get more cash value for your money. They can also be fun and rewarding for almost any credit card customer. However, not all reward credit cards are a deal. Some charge high fees to offset the costs of the bonuses. Some also have very low points systems, meaning that you need to spend a lot with your credit card to get any rewards at all. Read the fine print carefully before signing.
Cash Back Credit Cards
Cash back credit cards give you money rewards. When you make a purchase with this type of credit card, you get some points based on the amount of money you have spent with your credit card. When you accumulate enough points, you get cash back. On most cards, you can get back about 1% of your total purchases.
These cards are great for those who are budget-conscious as they give you some money back from your purchases. However, there are several drawbacks to these types of cards. Some cards have low cash-back percentage rates. Some charge high fees or have limits on how much money you can get back each year. Most cards only offer you cash back advantages on purchases – not on your balance. If you decide this card is right for you, do compare several card offers to find the best cash back credit card option.
Airline Credit Cards
This type of card allows you to accumulate frequent flyer points on all your credit card purchases. If you travel a lot or love to travel, this card can help you accumulate points for a free trip or for a discount ticket. In many cases, these cards are great because they allow you to gather points for every purchase.
However, these cards can also charge high fees. In some cases, your points will expire if you do not use them within a specified time.
Worse, some airline credit cards make use of a point system that is not very user-friendly. You may have to slowly accumulate an enormous amount of points to qualify for a trip. If you do not love to travel and if you do not use your credit card a lot, then, your ability to get rewards you like may be very limited.
Prepaid Debit Cards
These cards are sometimes called junior credit cards. They are not truly credit cards at all, since you are not getting credit or loans from the credit card company. Instead, these cards work by having you deposit some money into the card account. You can then use your card to charge any amount up to the amount in the account. When you add more money, you can charge more to your card.
If you have poor credit, no credit, or if you are underage, prepaid debit cards allow you to enjoy credit card purchases without the hassle of a credit card application. With these cards, it is hard to rack up high debt. The financing charges on these cards are also very small, in some cases. However, some prepaid debit cards charge extra fees for applications and for yearly use, so compare offers carefully before selecting this type of card.
Secured Credit Cards
Secured credit cards use collateral to ensure that the card company will be paid back. Often, these cards are used by people with no credit or bad credit. With secured credit cards, you can enjoy credit card convenience even if you do not qualify for traditional cards. However, you will also have to cope with the additional fees and low credit limits that these credit cards have.
Credit Cards For Bad Credit
Bad credit credit cards are designed for people with poor credit histories. These cards generally have very low credit limits and charge extra fees. This is because they are designed for people who are considered far less likely to repay their debts. If you have a bad credit rating, these types of credit cards can be a great way to rebuild your credit history. These cards can also allow you to have credit even if you would be rejected for most other cards due to your credit history.
Student Credit Cards
Student credit cards are cards meant to attract college and university students. These cards often offer sign-up bonuses for students. They are also easier to apply for, since credit card companies recognize that students have much shorter credit histories than the average customer.
If you are a student, student credit cards can be a great option. They are simple to use and can help you build a good credit rating before you graduate. However, there are some disadvantages to student credit cards. These cards may have no reward programs and may have fewer benefits, including fewer bonuses and services, than other cards.
Business Credit Cards
Business credit cards are created especially for business use. They offer many of the same advantages as traditional credit cards, but also offer services that can really help a business. With some business credit cards, for example, you can enjoy higher interest rates, extra cards for business employees, monthly reports on your expenses, and services that let you keep your personal and business expenses separate on the same card. These advantages mean that using this card for your business is more convenient.
If you own a business, you may wish to consider this type of card. The only real disadvantage of business cards is that there are so many of them. Some cards offer fewer features and some charge businesses additional fees for bonuses and services. You can avoid these problems by seeking out the best possible business credit cards for your needs.
Now that you understand the different types of credit cards, you can make the right credit card decision for yourself. Knowing which cards are right for you can help empower you to make the right financial choices.
If you already have a credit card, here are the main credit card payment methods.
