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Types of Credit Cards
There are many different types of credit cards available, from affinity to corporate cards. With so many cards to choose from, how do you know which is the right one for you?
Airline credit cards. This type of credit card is branded by a specific airline. The consumer earns travel rewards such as frequent-flier points that become redeemable for an airline ticket after the required number of points has been met.
Balance transfer credit cards. These are not a separate category of credit card; rather they are an amenity. Credit cards that offer this feature allow you to transfer the balance from one or more of your existing credit cards when you open a new account with the issuing bank. However, unless you have good-to-excellent credit, it is almost impossible to obtain a credit card with this feature.
Business credit cards. These are geared more toward small business owners. They offer greater flexibility in terms of paying off balances and provide financing for when your capital falls short. Unfortunately, both you and your business will need to have a good credit history to obtain these cards.
Cash back credit cards are a type of rewards credit card. Depending on the rules established by the issuing bank, cash back credit cards tend to offer the consumer a percentage back from qualifying purchases. Probably the most popular type of credit card on the market, it does often require you to have good-to-excellent credit for eligibility.
Instant approval credit cards. An online application with approval within minutes is what instant approval credit cards are. People with excellent-to-bad credit can apply.
Low interest credit cards. These offer a low interest APR as either a promotional offer, standard APR, or both. A lot of credit card issuers offer 0 percent APR for the first six months to a year, and then the default kicks in, which typically is 10.99 percent or greater. A standard low interest credit card is one whose APR is below 10 percent. A small percentage of low interest credit cards offer a 0 percent introductory APR with a default APR of less than 10 percent. These credit cards are geared toward people with good-to-excellent credit.
Prepaid cards are not credit cards, as you are not acquiring debt by using them. Rather, these cards act like credit cards, but you can only use up to the amount of money you deposited on the card. Anyone can obtain these cards.
Rewards credit cards are those that offer perks such as points, gas points, travel perks and hotel incentives. The idea of these cards is to get people who may not frequently use a credit card to do so by offering an incentive. Such incentives include rebates, free gas and free product choices.
These are eight of the most popular types of credit cards on the market. Most are geared toward people with good-to-excellent credit. However, the key here is to find the credit card that best fits your lifestyle and purchasing patterns.
