Although credit cards may all work in much the same way when it comes to making purchases, there are a few different card types to choose from. Making the right decision on which type of card to use may be just as important as looking for a good interest rate deal. What different types of credit cards are out there and what do they do?
The Standard Credit Card
A standard credit card can be used to make purchases that can be paid for in full every month or that can be part paid for. Interest will be added on any balance that is carried over month on month. This card may come without special deals or additional features or may be used as a base on to which deals or additional features are added.
Credit Cards With Special Introductory Deals
These cards generally come with a short-term deal or incentive. They include:
- Balance Transfer Cards: Balance transfer deals allow the user to switch over the amount owed on one or more other cards to the new one. They will generally be given a period of 0% interest or a low rate as part of the deal.
- Introductory Deal (0% and Discounted Rates) Credit Cards: Some standard credit cards will come with special offer deals for a period of time. These may include 0% interest deals or discounts on the standard interest rate usually charged on the card.
Other cards may, however, offer a lifetime deal or feature.
Credit Cards With Lifetime Deals or Features
Cards that may have permanent deals/features include:
- Lifetime Low Interest Credit Cards: A lifetime low interest option comes with a lower rate of interest than the norm on a permanent basis.
- Rewards Credit Cards: These products give rewards on spending such as general points that can be saved up to spend on other purchases or rewards for specific things (i.e. points towards hotel stays and flights).
- Cash Back Cards: Cash back credit cards work like rewards products but use cash instead of points. Here, any spending made on the card will earn a percentage back for the user.
- Charity Credit Cards: These products are linked to charities. Like cash back cards they can earn money on spending which is then donated to the charity.
- Sports Team Cards: Some sports teams and clubs will produce their own credit cards. Again, a percentage of the spending will generally be donated to support the team/club.
Getting access to these cards may depend on the credit rating of the applicant. Those with bad credit may need to look at alternative products.
Bad Credit Credit Card Options
Those with bad credit may need to look at specialist products. These include:
- Bad Credit Credit Cards: The criteria used to rate applicants for this kind of product may be a little more relaxed than that used for other cards making it easier to get approval from the card issuer.
- Secured Credit Cards: These cards involve the use of a cash security deposit by the user before they are issued to back up their spending.
- Prepaid Credit Cards: These products do not give a line of credit. To use them the card holder has to load cash on to the card before spending.
It is always important to get the best interest rates/deal possible when choosing a bad credit card.
Things to Consider Before Choosing a Type of Credit Card
Some people applying for credit cards may find that they can pick and choose from all the different types as they wish. If, that is, they have a good credit record and score. Those with previous financial issues may, however, find that they stand a better chance of getting a bad credit card.
Reading the terms and conditions of any card before making an application is vital as is making sure to compare deals and rates to find the best available option. It may also be worth looking at factors such as overall interest rates (especially at the end of introductory deals) and the actual value of offers and their advantages/disadvantages before choosing a product.
Carol Finch - Carol Finch is the Topic Editor for Retirement Planning, Budgeting, E-Commerce & Technical/Business Writing on Suite101.
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