Today, it is almost difficult to imagine a world without credit cards. A vast majority of people use these cards for making payments and/or buying things they need. However, you should familiarize yourself with the various types of cards out there in order to find the most suitable option for you. There are literally hundreds of credit cards available issued by dozens of card issuers. When choosing a card, it is advisable to figure out the type of card you want based on your needs. In case you lack information in this respect, check out some of the different types of credit cards available below.
Standard credit cards
Standard credit cards can be called plain vanilla cards as they do not offer any frills or rewards. They are also pretty easy to understand and use. These cards let you have a revolving balance up to a particular limit. When you make a purchase with the card, credit is used; more credit is available when you have made a payment. You need to maintain a minimum balance on the card to avoid penalties.
Balance transfer cards
Although most of the cards come with a balance transfer feature, a balance transfer credit card offers a low introductory rate on balance transfers on the card for a particular length of time. If you wish to save money on a higher interest rate balance on your existing card, then a balance transfer card can be a good option. However, you generally need a good credit score to qualify for these cards.
Rewards credit card
As the name indicates, these cards offer rewards on purchases made using the credit card. The rewards could be in the form of points, cash back and travel. If you travel frequently, you might benefit from a travel credit card. On the other hand, a reward card is a great option for folks who frequently make everyday purchases using a credit card.
Secured credit cards
These cards are good for people who have a bad credit history. Such cards require you to place a security deposit on the card. The credit limit on the card is equal to the amount of the security deposit, but it can be more in certain cases. The biggest plus of these cards is they attract a very low interest rate and can allow you to rebuild your credit score.
Limited purpose cards
Such cards can only be used for limited purposes at particular locations. They are like credit cards as they are often accompanied by finance charges and require you to make monthly minimum payments. Gas cards and store cards are good examples of a limited purpose card.
Benefits of credit cards
The obvious benefit of a credit card is being able to purchase things without a balance in your account. You can also rebuild your credit score with a credit card by making timely payments and maintaining a minimum balance at all times.
You can also use them to qualify for a loan without collateral. If you maintain a good financial standing on your card with no red marks, you stand a chance of getting a loan. All it takes is for you to choose the right credit card for your needs to capitalize on some of the various benefits.