The Common Types of Credit Cards

A credit card is a very convenient way to buy almost any item, from a wallet to a travel vacation for the entire family. But bear in mind that a credit card is not the same as a debit card. When you’re using a credit card, it means you are borrowing money. If you do not use it wisely, you can acquire a very bad debt. To help you determine which type of credit card suits you best, learn about the different types of credit cards:

1. Zero/Low Interest Rate Credit Cards: This is highly recommended for people who are willing and are able to pay credit card debt quickly. Most credit card providers offer bargain rates on balance transfers from other credit cards. A lower rate will save you a good amount of money on interest costs. But often, the lower rate will last only for 6 to 9 months, then immediately becomes higher, often about 14-16% when a single late payment is made. If you transfer a big balance but don’t pay it within the grace period, you may have a higher interest rate compared to what you had at the beginning.

2. Rewards Credit Cards: This card is best for individuals who make most of their purchases using cards and pay off their balance on a monthly basis. Credit card companies offer airline miles, cash back, or other points toward buying particular items based on the amount of money you spend. Some reward credit cards, for example, offer as high as 5% cash back on particular items without annual fee. Some credit cards have high rates and annual fees but eliminating the reward benefits. Other credit cards have unfavourable and complicated redemption policies. So it’s very important to read an offer very carefully.

3. Secured Credit Card: This type of card is recommended for clients who in the past have gotten into credit card trouble. Using this type of card wisely could help fix or build a bad credit rating. But as you apply you should give a deposit which often ranges from $200 to $250. Many of these cards have high annual fees and rates so you should read the fine print carefully.

4. Student Credit Card: This is recommended for college students who can manage money wisely. Students can acquire this type of card even if they haven’t built a credit rating yet. Many issuers of this type of card offer more benefits such as bookstore discounts or cash back. But some cards have higher rates. It’s quite easy for college students who are not very experienced at managing money to quickly incur unmanageable debts.

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