Choosing a credit card can be overwhelming. With hundreds of companies offering hundreds of cards, it’s easy to get lost in the shuffle and end up with a card that doesn’t suit your needs.
The first step in selecting your first credit card is determining the type you require based on your needs. Credit cards range from basic no-frills to premium cards with numerous perks and benefits.
We explore the various types of cards below.
Standard Credit Cards
Due to their simplicity and lack of perks and rewards, they are sometimes called “plain-vanilla” credit cards.
A standard credit card allows you to carry a revolving balance up to a predetermined credit limit. When you make a purchase, credit’s depleted, and more credit becomes available after you make a payment. Standard credit cards require a minimum payment by a specific due date to avoid late-payment penalties.
Balance Transfer Credit Cards
A balance transfer credit card offers a low introductory rate on balance transfers for a limited time. A balance transfer is an excellent option to reduce your high-interest credit card debt.
Rewards Credit Cards
Credit cards that offer rewards for purchases are known as rewards cards. They can be classified into three types: Cashback, points, and travel. While some people favor cashback rewards for their flexibility, others favor points that can be exchanged for cash or other goods. Travel rewards cards are still a favorite among frequent travelers due to the possibility of earning free flights, hotel stays, and other travel benefits.
Student Credit Cards
Student credit cards are designed specifically for college students, with the understanding that many young adults have little or no credit history. Student credit cards may include additional benefits such as rewards or a low-interest rate on balance transfers. To be eligible for a student credit card, students must be enrolled in an accredited four-year university.
Charge Cards
Charge cards don’t have set spending caps, and monthly balances must be paid in full. They also don’t have a finance charge or a minimum payment. Late payments may result in a fee, charge restrictions, or card cancellation.
Secured Credit Cards
Secured credit cards are an option for those with poor or no credit histories. It’s necessary to place a security deposit on the card. A secured credit card’s credit limit is typically equal to the deposit made on the card, but it may be higher in some circumstances.
Limited Purpose Cards
Limited purpose credit cards can only be used in certain places. They are similar to credit cards because they have a minimum payment and a finance charge. Examples of this type of credit card include store and gas cards.
Business Credit Cards
Business credit cards are exclusively for business use. They enable business owners to separate business and personal transactions easily. They are also available in standard business and charge cards.
