Types of Credit Cards

A wide variety to choose from

A credit card may seem like a simple and straightforward thing, but when you’re shopping around for one you’ll quickly find out that there are various types available. Below is a brief explanation of the most common types of credit cards.

Fees and Interest

Standard / No Fee Credit Cards are the most common types of credit cards. They are unsecured cards that are available at most banks and financial groups. These cards vary in how the annual percentage rate (APR) is offered and calculated and there’s usually no annual fee for the card.

Balance Transfer Credit Cards are designed to let customers transfer a higher interest credit card balance to a card with a lower interest rate. The terms of balance transfer credit cards vary, so it’s important to read the contract for each card.

Low Interest Credit Cards usually offer very low introductory interest rates that climb higher after a specific period of time. Many people take advantage of low introductory rates to make large purchases. However, there are some low interest rate cards that don’t rise to higher rates. These cards are typically in the 10 to 12 percent interest range. Try asking your credit card company for one of these and you may get lucky.

Rewards Credit Cards

Airline Mile Credit Cards are basically frequent flier credit cards that provide you with airline mile credits for each card purchase. Most programs give you a specified number of miles or points for each dollar amount spent. You can then redeem those accumulated points for airline travel or other goods and services. Make sure you find out whether the airline miles expire after a specified period of time. Most of these cards have an annual fee.

Cash Back Credit Cards give you cash rewards for using the card. Most of these cards will give you cash back rates of about one percent of your total purchases, excluding interest and finance charges. Some cards offer higher percentages with increased spending, and some cards offer higher percentages at specific merchants or for certain types of purchases. These cards usually carry an annual fee, so if you don’t use your card often, they may not be a good idea as your cash reward won’t cover the fee. However, if you use the card often and make full payments, it can save you a significant amount of money over time.

Reward Program Credit Cards usually offer their users incentives, rebates and discounts for using the card. They are similar to airline mile cards in the way they work. These cards usually have an annual fee. These include some store issued cards that allow you to shop nearly anywhere.

Cards Created for Specific Users

Student Credit Cards are created for students, who don’t often have any credit history. It can be hard for them to get approved for a traditional credit card. Student credit cards are designed to help students build up a credit history. They are basically standard cards with no added benefits.

Business Credit Cards are used by business owners and executives, and sometimes their employees, for business-related expenses.  They are geared to the needs of small enterprises.