Credit Card Types – What You Should Know

If you’re looking for a credit card, it’s important that you know the different types of credit cards that are available to you. A lot of people have a tendency to just sign up for any credit card they get accepted to. However, choosing the best type of credit card will help you reap all of the benefits of credit cards offer. Some of the most popular types of credit cards include:

Each type of credit card has their own benefits to them and depending on your individual circumstances, one may be better for you than another. Examine the features of each type and decide which one is best for you.

Standard Credit Cards
These are traditional cards that are commonly used. You can get them from your bank or other financial institution. They have credit limits, and have balances that carry over each month. You are charged interest on the monthly balance. The amount of interest along with your credit limit will be dependent on your credit score. Standard credit cards also require minimum balances to be paid every month. These also offer you the opportunity to transfer your balance from one credit card to another. When doing this, look for 0% APR on balance transfer deals. Standard credit cards are a great way of building up your credit as well.

Prepaid Credit Cards
If you don’t have a bank account, but would like to use plastic rather than paper, then prepaid cards are an excellent option. You load money onto the card to add to the balance, and you can’t spend more than you have on the card. For example, say you deposit $1,000 onto your prepaid credit card and then spend $100 on groceries. Now the remaining balance on the card will be $900 and once you use that up you have to reload the card with more money. They function like debit cards essentially without being connected to a bank account. They don’t have any finance charges or minimum payments since you can only spend what you deposit. Prepaid credit cards come with a variety of fees often times. Some fees include ATM fees, transaction fees, and withdrawal fees among others.

Business Credit Cards
These are considered specialty credit cards. They are for business use only. One of the main rules of business is not to mix personal spending with business spending so business credit cards will help you substantially. They can be issued to employees and owners of the business. They often include benefits such as expense tracking and rewards. Business credit cards usually become a necessity once your business grows and you find yourself making business purchases with your personal credit card.

Rewards Credit Cards
These types of credit cards are very popular among people who use their credit cards often. They allow users to get something back for their purchases. Most function on either a point system or offer some sort of cash back program. With point systems, you gain points based on the amount of points you spend. And then you can use those points to buy products that the merchant offers or gift cards to stores like Wal-Mart, Target, and CVS just to name a few.

Charge Cards
Charge cards aren’t as commonly used as other types of credit cards. They are more difficult to attain than standard credit cards due to the fact that they have no spending limits. The balance of the card is to be paid at the end of every month, which eliminates the need for finance charges. Typically you must have a high credit score in order to obtain a charge card, as well as meet other qualifications.

Store Credit Cards
If you’ve ever went to a big name retailer and been offered a credit card at the register, you’re not alone. Credit cards offered by stores are very common due to the fact that most consumers find it convenient to have a credit card from stores they regularly shop at. Often times, these credit cards offered by stores come with benefits such as 0% interest on purchases over a certain amount or a discount on your purchases. Old Navy offers 10% off purchases with their credit cards and Best Buy offers a variety of benefits for their credit cards as well.

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