Types of Credit Cards

Types of Credit Cards: There are different types of credit cards available on the market. Credit cards are generally classified into different types according to the benefits they provide to their users. In such a situation, it becomes difficult to choose the best credit card for yourself.

All you have to do before choosing a credit card is figure out which type of card will work for your needs, then focus on finding the right card. This post is about the various credit cards available in the market so that you can choose the right credit card according to your needs.

Standard Credit Cards

Standard credit cards are basic credit cards that offer a credit limit based on your creditworthiness. These are also called “plain-vanilla” credit cards because they don’t offer any frills or rewards. These credit cards often have no annual fee and may offer introductory APR offers. If you want a credit card that is not complicated and you are not interested in collecting rewards, then you can go for this type of card.

Standard credit cards allow you to use the credit limit up to a certain limit. At the end of each month, a finance charge is added to any unpaid accounts. To avoid late payment charges, credit cards have a minimum payment that has to be made by the specified due date.

Rewards Credit Cards

When you spend or make purchase with your credit cards, then these cards offer rewards for making purchases. There are three types of rewards cards:

• Cash Back Cards: With these cards, you earn a percentage of your spending back as cash rewards.
• Travel Rewards Cards: As the name of this card indicates, you earn points or miles that can be redeemed for travel-related expenses such as flights, hotels, or car rentals.
• Points Cards: Earn points for purchases, which can be redeemed for various rewards like merchandise, gift cards, or travel.

Airline and Hotel Credit Cards

These are co-branded cards offered in partnership with specific airlines or hotel chains. They often provide benefits like free checked bags, priority boarding, or hotel upgrades.

Gas Credit Cards

These cards are co-branded credit cards, also known as fuel cards, that offer rewards or rebates on gasoline purchases made at specific gas stations.

Balance Transfer Credit Cards

These cards allow you to transfer existing credit card balances to consolidate debt and often come with a low or 0% introductory APR for a specified period, but they usually have qualifiers such as a fee for each transfer. A balance transfer is a smart option if you want to save money on a high-interest balance on an existing card.

Secured Credit Cards

This card is designed for people with limited or poor credit histories, meaning people who have no credit history or have damaged their credit standing. These cards require a security deposit as collateral and help you build or rebuild credit. The credit limit on a secured credit card is usually equal to the deposit made on the card, but in some cases, it can be higher.

Student Credit Cards

Student credit cards are designed specifically for college students, with the understanding that these young adults often have little or no credit history. Geared towards students with limited credit histories, these cards often have low credit limits, and rewards or incentives are offered for good grades. A student credit card is often only available to people who are enrolled in an accredited four-year university.

Business Credit Cards

Created for business spending, these cards often offer special expense tracking, employee spending limits, and rewards tailored to business needs. These cards give business owners an easy way to differentiate between business and personal transactions.

Charge Cards

Charge cards are similar to credit cards in that you must pay the balance in full each month and there is typically no predetermined spending cap. Charge cards typically do not include financing costs or minimum payments because the debt must be paid in full. Depending on your card agreement, late payments may result in a fee, charge limits, or card cancellation.

Premium or Luxury Credit Cards

These cards offer high-end perks like airport lounge access, concierge services, travel credits, and exclusive offers. They often come with higher annual fees.

No Annual Fee Credit Cards

As the name suggests, these cards don’t charge an annual fee and are typically more basic in terms of rewards and benefits.

Read more: Best Credit Cards in 2023

Retail Store Credit Cards

Issued by specific retailers, these cards often provide discounts, rewards, or financing options for purchases made at the respective store.

Specialty Credit Cards

Some cards cater to specific interests, such as sports fans, charity supporters, or environmental enthusiasts, offering rewards and benefits related to those interests.

Remember that the terms and features of credit cards can vary widely between issuers and specific card offerings. It’s important to carefully read the terms and conditions, compare different options, and choose a card that aligns with your financial goals and lifestyle.

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