Written by: Karen Anthony
Credit cards are designed and issued to help people address their financial requirements. Some people minimize the use of credit cards as much as possible, to keep their credit card debts low.
Today, there are multiple credit cards to choose from. For instance, there’s the Chase Freedom credit card and others. The various types are discussed below:
- The standard credit cards
It refers to the usual credit cards that come with zero rewards and frills! It is easy to operate and understand. If you want a card that helps you settle your bills without any complications, this is the card for you. This card enables you to keep a revolving balance to a specified credit count. The credit gets used when you make a purchase. Also, an increased credit amount is available when the user has cleared the payment. There might be a minimal charge levied on the outstanding balance towards the end of the month. The credit cards also come with a minimum amount that the user should clear off by a specific date for avoiding any penalties on late payment.
- Rewards credit cards
As the name suggests, this credit card comes with rewards on purchases and payments. The rewards are of three types:
Some people love to opt-in for cashback rewards. While there are others, who prefer redeeming points for cash as well as other merchandise. On the other hand, travel cards are the best choice for travelers, as it helps them earn discounted hotel stays, free flights, and various other perks.
- The balance transfer credit cards
This card provides offers at a reduced introductory rate on the balance transfers for a specific time frame. Do you want to save your money on an increased interest-rate balance on your current card? If yes, then choosing a balance transfer card is a smart decision.
The balance interest rates always differ! A few cards come with 0% along with various qualifiers. For instance, the user needs to make at least two to three transactions per month. When the promotional rate is low, the card is more appealing to others. But it is essential to have decent credit to opt-in for this card.
- Secure credit cards
For people who lack a credit history or have completely damaged their credit status, this card is apt for them! The secured cards need the user to have a security deposit on the card. And usually, the credit limit is equal to the deposited amount on the card. However, the amount can go up as well. You can make monthly payments using this card.
- Student credit cards
The student credit cards usually get designed for college students. Typically, these people have zero credit history. Hence, if the student is a first-time applicant, he/she would find it easy to get the card sanctioned than any other credit card.
The student credit cards usually have some perks to follow! It could be a reduced interest rate on balance transfers or rewards. However, this isn’t the most attractive feature of this card. But to get this card sanctioned, the students are required to enroll in a reputed and accredited university for a four-year course. The students need to show accurate documents as well before the approval takes place.
- Charge cards
When you opt-in for the charge cards, there’s no preset on the expenditure amount. Also, the balances need to get paid completely when the month ends. Additionally, the charge cards don’t come with the minimum payment of the finance charge, as it is essential to pay the entire balance amount fully. The late payments might make you pay a specific fee as well as charge restrictions. Also, the card cancellations depend on the card agreement. It is essential to have a favorable credit history to opt-in for a charge card.
- Prepaid cards
As the name suggests, when you are using a prepaid card, it is essential to load money on the card. Else, the cardholder can’t use the card. All the expenditures incurred by the users get subtracted from the card’s balance amount. And the expenditure limit doesn’t get renewed till the time more money gets added to the credit card.
The prepaid cards don’t come with minimum payments and finance charges. It is because the balance gets withdrawn directly from the amount that the cardholder deposited. The prepaid cards aren’t specifically credit cards. Also, these cards do not help develop a good credit score. One can compare the prepaid cards at best to the debit cards, but it doesn’t get attached to a checking amount. Most people opt-in for it to stay within a specific budget.
- Subprime credit cards
It is one of the least preferred credit card options that people resort to. The credit cards get designed especially for the people who come with an unfavorable credit history. Additionally, this type of credit card comes with an increased interest rate as well as card fees. The approval process for this card is fast. Even the users who come with a questionable credit history gets the card quick. Also, the terms and conditions of this card sometimes are confusing.
Today, the Federal government has come up with specific rules concerning the subprime credit card fees amount. However, the card issuers usually look for the problems and means to not follow the rules. This credit card is not something that most people would want to opt-in for! However, despite these facts and issues, there are a few customers who choose to apply for this card. It is mostly because they are not able to get credit anywhere else. And when this situation occurs, chances are you need to go ahead and tackle all the risks by yourself.
These are some of the essential types of credit cards that users can opt-in for depending on their requirements. Each comes with its set of unique features and qualifiers. It is best to opt-in for a card that is hassle-free and also motivates you to maintain a good credit score.