When it comes to choosing a credit card, there are many different options available. These different types of cards have pros and cons that can help you find the perfect fit for your situation. Here are 7 types of credit cards to consider:
The interest rate on your credit card is an important factor to consider, especially if you’re considering a balance transfer, to consolidate debt, or plan to carry a balance.
Some credit cards will have low introductory rates, meaning that you’ll start off with a low rate before the rate increases. In contrast, there are some cards that offer the same consistent low interest rate. Both cards can be great options if you plan to carry a balance on your card, make large purchases with the card, or even to help you pay down a card balance.
Student Credit Cards
There are special credit cards that are only available to college students. The requirements are often more flexible since many students have little to no credit history and can help them qualify for a card that they might not otherwise be able to. Some lenders will even offer no annual fee or provide rewards based on school grades. This is a great type of card to help younger borrowers build credit and learn to use a credit card responsibly.
Secured Credit Cards
Instead of borrowing funds like an unsecured credit card, a secured credit card allows you to back the card with your own funds. It can be difficult to get approval for other types of credit cards when your credit is poor or lacking in history. By backing the card with your own funds, you can minimize the risk that the lender would incur by providing you with the card.
A secured card can be a great way to go when you find you have limited credit card options available. The money that you utilize to secure the card will be made available when the card is closed. This card provides the opportunity to build or repair your credit, while also opening or improving future borrowing possibilities.
Rewards Credit Cards
A rewards credit card allows you to earn rewards for your spending. As you spend money and utilize the credit card, you’ll earn points based on the amount that you spend. You can redeem the points for a variety of rewards, including cash, gift cards, and merchandise.
This option allows you to get more from your spending – you can receive these rewards for spending money that you were already planning to spend. Additionally, many lenders will offer promotions where you can earn extra points on specific types of purchases or during certain times of the year.
Cash Back Credit Cards
Similar to the rewards credit card, a cash back credit card enables you to earn cash back on the money you spend. A percentage of the money spent using the card is given back to you on a scheduled basis, often monthly or quarterly.
There is some variation to these cards as the cash back may be on all spending with the card or may vary based on specific types of purchases. This credit card also may have promotions based on categories of purchases or the time of the year where you can earn a higher percentage of cash back.
Store Credit Cards
Some retail stores offer their own branded credit cards. The restrictions and offers will vary between the retailers, but some will offer rewards or discounts based on your purchases. There may be some limits on usage, like you may only be able to use the card for purchases at that retailer or you may only get the rewards if you shop there. Be sure to review the interest rate and make sure you get a card that you can afford to pay off.
Travel Credit Cards
Travel credit cards offer specific rewards or discounts focused on hotels or miles for flights. Some companies will offer promotions for all spending with the card, while others may only offer those promotions if the purchases are made with a specific company or network of companies. You may be able to receive discounted stays or a free night at a hotel chain, or even miles to use for your flights.
There are many different types of credit cards for you to consider. Before you make any decisions about which card is best for you, make sure to review your credit and spending habits to make sure that you make the best choice for your situation.
Do you need to build up your credit?
Do you plan to carry a balance on the card?
Will you use the benefits or rewards provided by the card?
Asking yourself these questions can help get you on the right track to making the most of your credit card.