Types of Credit Cards

There are so many types of credit cards; it’s easy to get confused.  That’s why we broke it down for you, plain and simple.  Here is what you should know about credit cards. 

Balance Transfer Credit Cards
Balance transfer credit cards are very popular.  They allow people to transfer a previous credit card balance onto them.  The interest rate for balance transfer credit cards normally start out very low or even at 0% APR introductory rate / teaser rate.  But the catch is that after a year or a few months, however long the introductory rate is stated to last, the APR increase to a normal rate, definitely higher than any introductory rate.  Balance transfer cards are considered unsecure cards, because you are not required to deposit money to demonstrate that you have money to pay your balance before using the card. 

Low Interest Credit Cards
Like balance transfer credit cards, low interest credit cards are also unsecure.  Low interest credit cards are popular because as the name implies there is low interest.  These cards either have no introductory APR and after the introductory period, the APR raises higher, or they have a fixed, yet relatively low APR throughout the entire term.  Low interest credit cards are great for making large purchases, because it allowed for you to pay it off over a longer period of time with little or no interest. 

Rewards Credit Cards
Rewards credit cards are those which you can earn benefits such as cash back or points.  Points are used almost like cash.  They can be exchanged for goods such as jewelry, electronics, hotel stay, plane tickets, gift cards, gas, and the list is endless!  The amount of cash back or points that you get from rewards cards are dependent upon the amount of money you charge with the credit card. 

Secured Credit Cards
Secured credit cards are for people with bad credit or no credit at all.  Yes, there are actually credit cards for everyone!  And you thought issuers didn’t trust you?  Well, they still don’t.  Secured credit cards require collateral.  Typically you must deposit money into an account to prove that you can pay your balance before using the card.  You can also use items such as a house, car or stocks, to show you are capable of paying.  The amount of credit on the credit cards normally corresponds to the amount of collateral you put up.  Secured credit cards are great if you want to build or rebuild your credit!

Prepaid Credit Cards
Prepaid credit cards aren’t really credit cards, but they function and are accepted just like credit cards.  The benefit of prepaid credit cards is that there isn’t any interest to pay, because you can only spend the amount of money that you physically put on the card. 

Business Credit Cards
Business credit cards are specifically geared towards business owners and executives.  These cards are similar to traditional credit cards but have additional features that are useful to businesses.  Some features may include additional credit cards for employees, higher credit limit and expense management reports, just to name a few. 

Student Credit Cards
Student credit cards are tailored to students attending a four year accredited college or university.  Because students generally do not have credit, this credit card is intended to help students build credit.  Student credit cards have lower credit limits and less benefits and rewards. 

Remember, all credit cards are different, so make sure you read the cardholder agreement that tells you the details about your terms and conditions.