Are there different types of credit cards? You bet! And knowing what they are can help ensure that you’re taking advantage of all the perks your card has to offer. If you’re unfamiliar with some of these different types, take a look at our breakdown. We’ll go over some popular options, including rewards cards and student cards.
Credit cards such as cashback, airline miles, travel points, and gas perks are what we refer to as reward cards. This type of card is great for those who like to score a little something in return for their purchases. However, reward card users will probably pay more interest than their standard interest counterparts. It’s important to maintain your payments, so you don’t have late fees or miss any payments at all.
If you don’t have a perfect credit score or no credit at all, it might be worth looking into secured cards. These tend to have higher interest rates and smaller signup bonuses than unsecured credit cards, but they can still give you a chance to build your score. An even more niche class of secured cards is available for folks who send money home through services like Western Union.
Business Credit Cards
Most business owners will want to apply for a business credit card. Business cards are often treated differently than personal cards in terms of approved amount and interest rates, but as long as your small business is profitable and shows a good record, applying for one might be a good idea if your company does not have its own merchant account.
Many prepaid debit cards have higher fees and lower limits than other varieties. They also don’t offer any protection from liability for unauthorized charges, so it is best to use them only when you can’t get a regular bank account or credit card for some reason. You may want to keep one on hand in case someone steals your wallet—once an issuer freezes your funds, most prepaid transactions become useless too.
Student Credit Cards
Great for college students who are looking to establish good credit. In addition, they offer a relatively low-interest rate, which can help when making large purchases like a computer or bicycle. To avoid huge amounts of debt, students will want to be sure they have enough cash in their bank account to pay off their cards on time each month.
Secured Vs. Unsecured?
When it comes to personal debt, secured credit cards are among some of the safest. That said, there is still a lot of confusion surrounding how they work and how they compare to other types of loans. A good rule of thumb is that if you plan to use your card every day or pay off your balance in full at the end of each month, then an unsecured card may be better for you. But if you plan on only making purchases occasionally or maybe not always paying off your balance, then a secured card is probably better for your financial situation overall.
When choosing a credit card, it’s essential to weigh all your options and choose one that best fits your lifestyle. When selecting a rewards card, look for cashback or rewards points offers.