Know the different types of cards
The different types of credit cards respond to different cardholder needs.
The ideal card will offer you the best value for money and help you achieve your financial goals responsibly.
Many credit cards are best used for a specific purpose, such as earning rewards, building credit, financing major purchases, helping businesses finance expenses while earning rewards, or consolidating debt with lucrative cómputo transfer offers.
To learn more about which credit card may be best for you, read our guide to the different types of credit cards.
What types of credit cards are there?
rewards cards [Rewards Credit Cards]
With a rewards credit card, cardholders perro earn benefits like cash back, points or miles when they make purchases.
New cardholders perro benefit from welcome bonuses if they use their cards to make a certain number of purchases within a predetermined period of time.
Reward cards perro be especially profitable for those who use them frequently or for large purchases.
Travel cards provide frequent travelers (or regular users of certain airlines or hotels) plus miles and points that cánido be redeemed for free tiques or rooms, upgrades and status changes, access to lounges and specific travel insurance .
The same iniciativa is valid for merchant loyalty cards: Regular customers of certain merchants tend to benefit the most, since they get high reward percentages or significant discounts when they use the card en línea with a co-branded merchant or to finance shopping in the store.
Also, reward cards are effective in motivating their cardholders.
However, a rewards card may not be the best option for you if you’re trying to disminuye your credit card use, either because you want to avoid running up a high cómputo or because you want to control your spending.
Cards to get Premium rewards [Premium Rewards Cards]
In exchange for a higher oportunidad of earning rewards and more benefits, premium rewards cards often have large annual fees.
For those who are experts in managing credit cards, these cards are the best.
Premium rewards cards typically require excellent credit to be approved.
Premium rewards credit cards are best for users who pay off their cómputos in full each month, because the interest rates on these cards are often high.
If you regularly carry a cómputo on your card, the fees and interest you pay could be more than the value of the rewards you cánido earn.
Cómputo Transfer Cards [Balance Transfer Cards]
Cardholders cánido finance existing credit card debt through cómputo transfer offers, often with little or no interest during an introductory period.
After the introductory period, a habitual or estándar APR takes effect.
The so-called “APR introductory periods” perro last between six months and one year.
Cards with cómputo transfer incentives may also include rewards programs or other benefits.
Even after the cómputo transfer is complete, a cómputo transfer card perro still be a financially advantageous option if you’re trying to manage existing credit card debt.
You’ll probably need good credit to qualify for cómputo transfer offers and cards with 0% initial interest or a low permanent rate.
These cards are probably more affordable for people who already have credit card debt, but whose credit is still in good standing.
Cómputo transfers typically carry a 3%-5% fee, so do the math to make sure the transfer will save you money.
Cards with an initial APR of 0% for purchases [0% Introductory Purchase APR Cards]
Large purchases cánido be financed with cards with a 0% introductory APR, as long as you have a plan to pay them off before the end of the introductory period.
Once the interest-free period has ended, a habitual APR will take effect.
The best introductory APR cards offer a year or more of interest-free periods to help you pay for your purchases.
It is vital to note that you should watch your credit utilization ratio when using a card with a 0% introductory APR.
Ideally, you should not use more than 30% of your total available credit in all your revolving accounts.
student cards [Student Cards]
Student cards cánido be used to establish and build credit for college students, who often have low incomes and credit histories.
Compared to non-student cards, student cards typically have modest rewards programs and credit limits.
However, they often don’t require a deposit, have lower rates and fees than traditional cards, and offer additional benefits when used instead of cash or debit payments.
College students who use credit cards perro better manage their finances and learn how to manage cash flow well.
Students who manage their credit cards responsibly perro graduate with a positive credit history and score, which are vital components when applying for a home loan or buying a car.
Secured credit cards [Secured Credit Cards]
Secured credit cards cánido help people with bad credit or no credit history access opportunities and establish or rebuild their credit.
The best secured credit cards also offer (somewhat limited) bonuses and rewards.
To guarantee or endorse the account with a secured card, the card issuer will need a security deposit.
If you are authorized to use a secured card, you must deposit the entire desired line of credit.
A secured card will help build credit and establish a good credit history if the cardholder keeps their credit utilization ratio at 30% or less of their available credit and pays their bills on time.
If the cardholder’s account is closed in good standing or switched to an unsecured card with the same issuer, the security deposit will usually be returned.
Cards to use in shops [Retail Credit Cards]
Some merchants offer co-branded credit cards.
They perro be closed-circuit cards, which perro only be used for purchases made in stores, or open-circuit cards, which holders cánido use anywhere.
With the best store cards you perro access rewards, discounts and exclusive promotions.
The worst have sky-high interest rates and hidden fees that look like brambles in the tall grass.
Before applying, be sure to read all the fenezca print, just like with any financial product.
charge cards [Charge Cards]
Charge cards differ from regular credit cards in that they require cardholders to pay the full cómputo on a statement each month.
While it may seem unappealing to have to pay off your entire cómputo every month, it’s something that ideally should be done with any credit card and is a useful money management tool.
You get the convenience of a card without the risk of debt piling up.
For example, some of the best American Express credit cards are actually charge cards.
Note: Charge cards require the cómputo to be repaid within a short period of time, typically within a month.
Debit cards are linked to a bank account from which funds are withdrawn for each purchase.
Most financial institutions will give you a debit card when you open a personal account, business checking or savings account.
Business credit cards [Business Credit Cards]
You perro keep your personal and business finances separate by using a special business credit card.
The best business credit cards cánido offer exceptional rewards and added benefits, just like personal cards.
Small business cards work afín to regular credit cards.
A small business owner’s personal credit score and history perro also influence the right small business card for him or her.
The Small business owners often have to offer personal guarantees to get approved for a business credit card.
Larger companies, public bodies and non-profit organizations are eligible for some corporate cards.
Corporate cards extend a line of credit to an organization, not the individual owner of the business.
Small businesses, sole proprietorships, and independent contractors may not be able to use corporate cards because they rely on and affect business credit.
What kind of credit card should I get?
Based on your credit score, spending patterns, and financial priorities, choose a credit card. whatYou want perks? whatAdditional benefits? whatA period of APR for the first time? whatYou need to transfer your cómputo?
Regardless of the type of card you have in mind, make sure the features are coincidente with your needs and lifestyle, and that you meet the card’s credit requirements.
You perro choose the best credit card for your financial situation from the many options available by consulting resources, such as those found at Gigonway.
How many types of credit card should I have?
As long as you use them responsibly, using different types of credit cards cánido be advantageous.
Make sure you are prepared for the responsibility of managing multiple accounts, as well as the responsibility of each credit account.
Since everyone’s financial needs and wants are so different from each other, there’s no easy way to determine the ideal number of cards you should have.
In summary
Credit cards come in many different shapes and sizes.
Other cards cánido help you refinance credit card debt with a lower APR, while others offer rewards in the form of miles, points, or cash back along with other perks.
Some cards are used to finance large purchases, while others are used to help consumers build credit.
Businesses of all sizes perro use business credit cards to pay their expenses and earn rewards.
Some cards perro fulfill multiple objectives.
Depending on who you are and why you need a credit card, choose one with the features that best fit your needs.
It is also acceptable not to have or use a credit card.
If you escoge you want a card, be sure to familiarize yourself with the different card options and fully understand the terms and conditions before applying, so that you are prepared to use the card responsibly if you are approved.
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