A credit card is a premium card issued by a bank or financial services company to users (cardholders), which permits cardholders to loan funds to pay for goods and services with retailers that accept cards for payment. This article will center on the Type of Credit Card.
Hence, in this article, we will be telling you the different types of credit cards you need to know.
That’s not all, we will also tell you some other key facts about Credit Cards.
However, to get every info you need, make sure you read through.
Now, without delay let’s get started.
Credit cards are vital tools to build your financial strength.
However, not all credit cards are equal.
Hence, based on your personal finances and certain status quo, some cards might be much more helpful to you than others.
Now, let’s glimpse at the various credit card choices that are at hand today.
What Is the Difference Between a Secured and an Unsecured Credit Card?
Most credit cards include Visa, Mastercard, Discover, and American Express which are issued by banks, credit unions, or other fiscal companies.
Hence, before we talk about the different types of credit cards, let’s glimpse at the difference between secured and unsecured credit.
Unsecured Credit Cards
With unsecured credit cards, you don’t have to deposit cash as collateral for the line of credit being given to you.
Unsecured credit cards are a fair choice for most consumers.
Hence, it can help you build credit and some cards can also earn you cashback or rewards when you use them.
Secured Credit Cards
On the other hand, with Secured Credit Cards, you will have to make a deposit for you to conserve your line of credit.
However, in this case, your credit line is often equal to the amount of money you deposited.
Hence, a secured card works like a debit card besides that it helps you to build your credit record.
Types of credit cards
Below are the basic types of credit cards you should know:
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Standard credit cards
This type of credit card allows you to spend up to a certain credit limit, with no interest charged if you are able to settle the complete balance by the due date.
Benefits
- It is cheap or even free to use if you pay off the balance every month.
- A standard credit card with low APR may cost less in interest than other credit card options.
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Rewards credit cards
This type of credit card operates the same but gives perks such as travel points or cash back mostly in the form of a statement credit.
Hence, it operates in the same way as standard credit cards.
Benefits
- The Standard credit card perks can vastly reduce the useful cost of credit.
- Also, if you love traveling, benefits like free or reduced flights and hotel stays can exceed the annual fees.
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Balance transfer credit cards
This credit card has low entry-level interest rates which make it fitter to transfer balances from other credit cards.
Hence, you usually need a good credit score to qualify for a balance transfer card and even better credit scores to get a 0% balance transfer card.
Benefits
- This credit card can help you pay off your credit card balance faster by reducing part of your payment spent on interest charges if used well.
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Charge Cards
This credit card allows you to spend without limit, but in general, you will have to pay the balance in full each month.
Also, there is no interest charge if you pay on time, but late payments may incur vast fees.
Benefits
- In general, this credit card has no credit limits or much higher limits than standard credit cards.
- It can be used for one-off large purchases.
- It also has generous perks programs.
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Student Credit Cards
These credit cards are mostly for college students looking for their first card.
Hence, if you’re accepted in an authorized four-year university course, you may qualify for a student credit card.
Benefits
- You can often get a student credit card even if you have a fixed credit record.
- Some offer fiscal perks if you have a good grade point average (GPA).
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Business Credit Cards
These credit cards are mostly used by business owners and employees and may be offered business-focused rewards.
Hence, business cards are charge cards that have no credit limit or a very high limit.
However, it must be paid in full every month.
Benefits
- It can help your cash flow
- Perks programs can help reduce business costs.
- You can also offer employees credit cards to help them keep tabs on bills.
- Also, you can keep your business-related expenses separate from your personal bills.
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Secured Credit Cards
This card needs a deposit to conserve your line of credit.
In this case, your credit line is often equal to the amount of money you deposited.
However, a secured card works like a debit card besides that it helps you to build your credit record.
Benefits
- In general, you can get this credit card without good credit.
- Also, it helps you build credit when used often and paid on time.
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Limited-purpose credit cards
This credit card includes store cards and gas cards.
They can only be used at specific retail locations.
Hence, some of these credit cards offer discounts or perk points.
Benefits
- It is often easier to get.
- It is useful when you often shop at the same store.
Credit Cards That Save on Interest
If you’re making the minimum payments or partial payments on the supposed time to pay the bills, saving money on interest can have a major impact on your overall financial health and well-being.
Hence, an interest rate of a credit card isn’t of much an issue for those who pay their credit card bills in full on the due date.
0% and Low-Interest Cards
With a low-interest credit card, you can save a lot of money after some time, when you have a balance on your card.
So, if you want to fund a big purchase, there are some credit card that offers an entry-level 0% APR for a period of time.
Hence, if you pay off the balance at the end of that entry-level period, you don’t have to pay any interest on the purchases you make during that time.
Balance Transfer Cards
This is another great way to save on interest.
With the balance transfer card, you can transfer high-interest debt to a card with a lower interest rate.
Hence, most balance transfer cards offer an entry-level period with 0% APR, which allows you to break while you work to pay off your current debt without getting more interest in the meantime.
However, to qualify for balance transfer cards, you usually need good credit.
Credit Cards That Earn Rewards
If getting a credit card that helps you save on interest isn’t what you want, you can consider getting a reward credit card.
With a reward card, you get back perks when you buy something using a reward card.
However, there are various types of reward credit cards.
Hence, there are three general structures for this type of card which are; are cashback, miles, or points.
For instance, a travel rewards card can give you some points for each dollar you spend.
With these points, you can pay for travel expenses like hotels or flights.
On the other hand, if you’re not a travel person, you can check out other credit card options.
Hence, when you purchase something using your reward card, you will get some part of the money you spend back in cash.
However, some cashback cards use a points system, where you can convert your points to a dollar value or use them in other ways.
While Rewards credit cards that operate on miles setting offer airline miles as a reward for making purchases.
Hence, as you build up miles from time to time, you can fund your bills with things you’ve bought in the past.
In general, you need good to great credit to be qualified for rewards cards.
Having said that, there are some rewards credit cards that are accessible to people with less than great credit.
Credit Cards That Build Credit
A secured credit card is a good way to build and enhance your credit.
With good credit, you will have more credit card options at hand for you in the future.
Hence, if you don’t want to apply for a credit card later, your credit health can impact various areas of your life.
Such as your ability to take out loans, rent or buy a house, and even future job opportunities.
However, a secured credit card usually needs a deposit, which reduces the risk to the lender and makes it very easy to get.
So, if you want to improve your credit, you can consider the lending options which are at hand for you in the future.
Hence, a secured card is one of the easiest and swiftest ways to doff the “bad” credit score range when used well.
Some major credit cards
According, to Forbes the Best Credit Cards of 2022 are:
Chase Freedom Flex
- Best for the best cash back, best no annual fee card
- Edit score: excellent, good
- Annual fee: $0
- Welcome bonus: $200 bonus
Wells Fargo Active Cash® Card
- Best for Best 0% APR and Best Flat Rate Cash Back
- Edit score: excellent, good
- Annual fee: $0
- Welcome bonus: $200 Cash Rewards
Capital One Venture X Rewards Credit Card
- Best for Best Flexible Rewards Card
- Edit score: Excellent
- Annual fee: $395
- Welcome bonus: 75,000 miles
Chase Sapphire Preferred® Card
- Best for: Best Entry Level Travel Card
- Edit score: Excellent, Good
- Annual fee: $95
- Welcome bonus: 60,000 bonus points
Chase Sapphire Reserve®
- Best for: Best Card for Travel Insurance
- Edit score: Excellent
- Annual fee: $550
- Welcome bonus: 60,000 bonus points
The Platinum Card® from American Express
- Best for: Best for Luxury Travel and Lifestyle Benefits
- Edit score: Excellent/Good
- Annual fee: $695
- Welcome bonus: Earn 100,000 points
United Club℠ Infinite Card
- Best for: Best Airline Card
- Edit score: Excellent
- Annual fee: $525
- Welcome bonus: 80,000 bonus miles
Aeroplan® Credit Card
- Best for: Best Mid-Tier Airline Card
- Edit score: Good, Excellent
- Annual fee: $95
- Welcome bonus: 70,000 points
Hilton Honors Aspire Card from American Express
- Best for Best Hotel Card
- Edit score: Good/Excellent
- Annual fee: $450
- Welcome bonus: Earn 150,000 points
The World of Hyatt Credit Card
- Best for: Best Mid-Tier Hotel Card
- Edit score: Excellent, Good
- Annual fee: $95
- Welcome bonus: Earn up to 60,000 Bonus Points
Discover it® Student Cash Back
- Best for: Best Student Card
- Edit score: Fair/New to Credit
- Annual fee: $0
- Welcome bonus: Cashback Match
Wells Fargo Reflect® Card
- Best for: Best Balance Transfer for Long Payment Window
- Edit score: Excellent, Good
- Annual fee: $0
- Welcome bonus: N/A
Amazon Prime Rewards Visa Signature Card
- Best for: Best for Amazon
- Edit score: Excellent, Good
- Annual fee: $0 with Prime membership
- Welcome bonus: Amazon gift card
Blue Cash Preferred® Card from American Express
- Best for: Best for Groceries
- Edit score: Excellent/Good
- Annual fee: $95
- Welcome bonus: Earn $350
U.S. Bank Altitude® Go Visa Signature® Card
- Best for: Best for Dining
- Edit score: Excellent Credit
- Annual fee: $0
- Welcome bonus: 20,000 bonus points
Petal® 1 “No Annual Fee” Visa® Credit Card
- Best for: Best for Bad Credit
- Edit score: Fair/Bad
- Annual fee: $0
- Welcome bonus: N/A
Discover it® Secured Credit Card
- Best for: Best Secured Card
- Edit score: New/Rebuilding Credit
- Annual fee: $0
- Welcome bonus: Cashback Match
Conclusion
We hope we’ve been able to give you all the info you need on the different types of credit cards you need to know.
Hence, if you have any questions about credit cards, please leave a comment.
Frequently asked questions (FAQS)
How long does it take to get an 800 credit score?
It can take several years or more to build an 800 credit score depending on your starting point.
How can I get a black card?
Black card invitations are only too high earners who have spent and paid off between $350,000 and $500,000 across all of their American Express accounts in a year.
How long does it take to build credit?
It usually takes about six months to get your first credit score.
Hence, good or excellent credit takes longer.
What is the credit score required for a credit card?
You can get a credit card with a score of 750 and above.
However, people with lower CIBIL scores can also be fit for a Credit Card.
What is a bad credit score?
According to FICO, a credit score is considered to be poor if it falls below 580.