Types of Credit Cards

Why are there different types of credit cards available for consumers? The answer to this is simple: financial requirements differ from one person to another and creditors understand this fact. Thus, they created different credit card products to meet the needs of each consumer. This is the reason why there is now a wide assortment of credit card products available. Consumers enjoy the great number of options, but selection should be based upon the pros and cons along with the qualities of the credit card type.

If you want to get hold of the right credit card, take a look at the choices presented to you:

Standard Cards

This type of credit card is the most common. It allows you to possess a revolving balance, which can reach up to a particular credit limit. You can use this card to make purchases and each time you do so, credits are subtracted from your available balance. They will be accessible again once you make your payment. Whenever you don’t pay your balances, you will mostly be charged a late fee at the end of each month. There is also a minimum monthly payment which is required to avoid penalty fees.

Instant Approval Credit Cards

The principle of this kind of credit card is to have the consumers fill out the form and learn the decision within minutes. If you apply at banks, you may have to wait a few weeks before you will know whether you have been approved or not. With instant approval credit cards, the waiting process is a lot shorter, especially if you have good or excellent credit. This is quite popular nowadays since you can apply online and over the phone.

Premium Credit Cards

Unlike standard cards, which have no frills, premium cards have benefits and incentives. They often come in Gold and Platinum types where you can get cash back, miles or travel points, upgrades, and many other rewards. Note that premium credit cards charge higher fees plus there are credit score and minimum income requirements.

Balance Transfer Credit Cards

Not everyone has excellent credit. In fact, there are more people that have fair to poor credit score. Most that are graded as such suffer from credit card debt. One way to relieve themselves out of that situation is to use a balance transfer card. This offers low interest for a given period of time so you can consolidate your debt. If you have a credit card with a balance, transferring the balance to this type of card may be a good idea. Since this has lower interest, it is easier to repay the bills.

Charge Credit Cards

With these credit cards, you don’t have to worry about spending limits. However, you should be able to pay off your balances in full each month. Typically, there is no minimum payment and no finance charge. Depending upon the agreement, delayed payments can result to charge restrictions, fees, or even card cancellation.

Secured Cards

These are for those who do not have credit history yet or are planning to reestablish their credit. A secured card requires security deposit in which the credit limit will be based upon. In some cases, companies may grant limits that are a bit higher than the deposit. Nevertheless, you still have to pay for the card monthly.

Learn the difference between a secured card and a non-secured card here.

With the different types of credit cards available in the market these days, you may find it a little hard to choose the right one for you. The key is to choose based on your preferences, lifestyle, your needs, and your financial capacity, and your present financial situation.