Types of Credit Cards
There are numerous kinds of credit cards given to countless consumers. The type of credit card provided varies depending on your credit score, how much you can afford, or for what purpose you’ll use it.
To help you figure out which type to choose or what you must get, we’ll list all primary types of credit cards and discuss how they’re unique from one another.
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Main Credit Card Types
Banks or financial firms give credit cards to let cardholders borrow funds and use them for immediate purchases. In return, cardholders are expected to pay back the money with charged interests.
Reward Credit Cards
These cards give points to the cardholder for a percentage of their purchases. You can also get bonuses or reward points for specific categories like groceries, gas, etc. Rewards can be redeemed in various ways or forms like gift cards, merchandise, or others.
Balance Transfer Credit Cards
This type allows holders to transfer credit card balances. This way, you can manage and pay down your debt for a small amount of transfer fee. This is useful if you have an existing high-interest credit card. Most balance transfer cards can secure you a 0% APR or annual percentage rate for a period typically between 15 to 21 months.
Standard Credit Cards
These cards are often referred to as plain vanilla cards because they’re simple and easy to utilize. A standard one doesn’t offer rewards or anything extravagant. Instead, a standard credit card allows holders to borrow money and have a revolving balance with a specific limit. Credits are used when you purchase using your card and are only available again once they are paid.
Student Credit Cards
As its name suggests, these cards are made for students – college students to be specific – who have little to no credit history. These cards are easier to get and usually come with perks like low-interest transfer rates or rewards. Only students who are enrolled at an accredited four-year university can be approved of having such a card.
Secured Credit Cards
These are cards suitable for people without credit history or damaged credit status. However, unlike the previous types, secured cards require a security deposit of a certain amount. The amount of security deposit on the card will also be its credit limit.
Prepaid Credit Cards
Since they are prepaid, cardholders need to load the card before they can use it. When you make a purchase, it will be deducted from the loaded balance. To renew the balance, you need to load the card again.
Limited Purpose Credit Cards
One popular subtype of these cards is store credit cards which can be used only in particular stores. Generally, limited purpose cards can only be used at specific locations or for definite purposes.
Business Credit Cards
These are for business use only. Business credit cards allow cardholders to manage their personal and business transactions separately. But still, to qualify and get approved, your personal credit history is considered.
Based on the primary purpose of why you’re getting a credit card and how you want to use it, you can choose and get various types of cards. It’s best to consider how they’re different from one another and learn what you need to qualify separately.