Are you planning to get a credit card to improve your credit score to get a home mortgage? In previous blog post we discuss just about the credit card basically so I decided to write about variety of credit cards and its usage. Choose the right type of credit cards that suites you.
If you are, then you should understand that your needs differ from others. That is why; credit cards vary from one to another.
So, before you apply for one, familiarize yourself first with the following types:
Standard Credit Cards: These types of credit cards are the most common. They are readily available from banks and financial groups. These do not need proof that you can repay the money since you will not be required to put down a security deposit. In this type, you will have a revolving balance with a specified credit limit. You can use this credit to purchase whatever you like (as long as the establishment accepts credit cards, of course). When you’ve made your payment, you can use it again after you’ve made a payment. If you have an outstanding balance, finance charges will be incurred at the end of each month.
- Two examples of these are the balance transfer credit cards and the low interest credit cards. In a balance transfer credit card, consumers can transfer a high interest credit card balance to a credit card with a lower interest rate. On the other hand, a low interest credit card can offer low introductory annual percentage rate (APR) or a single low fixed rate APR.
Credit cards with rewards programs: Every time you make a purchase using these types of credit cards, you earn incentives. For every dollar that’s charged on the card, points are accumulated. Cardholders will be redeeming these accumulated rewards for different rewards. There are seven major types, such as the following:
- Two examples of these types of credit cards are the Cash back credit cards and the General reward credit cards. In a cash back credit card, you surely get your money back. Whenever the cardholder makes a purchase, the user earns cash rewards. So, you better start using this more often, so you’ll get more and more rewards. In a general reward credit card, the cardholder gets points towards a reward structure which is based on how much the card is used. A cardholder can cash points in for items like gift cards, electronics, hotel stays, plane tickets, jewelries, etc.
Charge cards: This type is not subjected to a credit limit. The balance shall be in full so there are no finance charges at all.
Secured credit cards: These are appropriate for those who have no credit history. In this type, a security deposit is required; wherein the credit limit is equal to the deposited amount.
Prepaid Credit cards: Before this card can be used, the cardholder should fill the card with money so he/she can use it. Credit limit is only renewed when money is loaded onto the card. The user is not tied to finance charges as the balance will be withdrawn from the deposit.
Specialty credit cards: From the name itself, these credit cards are for users with special needs.
- Examples could be business professionals and students. Business credit cards are made available for business owners and executives and so its perks are exclusively added to suit their endeavors. On the other hand, Student credit cards are available for college students who are enrolled in accredited four-year colleges and universities. If student cardholders will use it wisely, they will easily qualify for cards with higher credit lines.
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