The Four Different Types of Credit Cards
There are essentially four different types of credit cards in today’s credit market: reward credit cards, standard credit cards, cards for rebuilding credit (or bad credit credit cards), and specialty credit cards.
Each card has specific pros and cons that are unique to that type of card. Many of these are merely personal decisions on your part as a consumer but it is better to go into the situation armed with knowledge. Below you will find a little information on each card type that should help you make the best possible decision for your credit needs.
1) Standard credit cards are just that, standard. There are no remarkable values or rewards that are associated with them. At the same time you can typically get a lower interest rate with these types of cards, as you aren’t paying extra for rewards, miles, trips, airfare, or exotic getaways.
The best thing about these types of credit cards is that they often offer outstanding offers in order to lure your business in their direction. Many will offer a 0% interest rate for a specific period of time. You can then transfer your balances from higher interest cards to these zero-interest cards.
Make sure you understand any hidden costs in that 0% interest rate before transferring your balance and taking the offer, as there are sometimes fees involved that might prove prohibitive. You should also check for balance transfer fees and exclusions that cannot be covered under the special rate. You should also pay close attention to the expiration or time limit on these introductory rates as well.
2) Reward credit cards are growing in popularity as companies compete in an effort to show you the best possible rewards. You can find rewards of all kinds from vacations to exotic locations to free gasoline. Most of these programs offer to match points for dollars while some will offer extra points for specific purchases. The fine print with these cards often arrives in the interest rate, which is must more costly than what you will find in your standard credit cards. There is nothing, as the saying goes, that is truly free, even credit card rewards.
3) Bad credit credit cards. Cards for bad credit are becoming increasingly popular and forgiving in today’s market as consumers are, perhaps for the first time, beginning to understand just how important a good credit history is. These cards are wonderful for those needing a second chance at credit but come at a high cost in regards to the interest rate.
There are typically three types of credit cards available to consumers who have bad credit: secured, unsecured, and prepaid. Each one will depend largely on how severe your credit problems are. The good news is that responsible spending and repayment with these cards can often lead to establishing better credit for your future. If you find yourself in need of a bad credit or credit building card you should take care that you do not repeat the mistakes of the past. This is a second chance for you as a consumer; you should not take it for granted.
4) Specialty credit cards were created in order to cater to specific needs. There are two primary types of specialty cards on the market today: business credit cards and student credit cards. These cards suit specific purposes and are only intended for those purposes. They will offer special incentives and features to the audience for which they were created and are an excellent choice if you fall into one of the categories covered.
Regardless of the type of credit card you ultimately decide to apply for, it is in your best interest to read and fully understand all the fine print before applying. The more you know about the card you are getting and the price you will ultimately pay for the privilege the better prepared you will be to live up to your responsibilities as the cardholder.
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