Different Types of Credit Cards And Their Uses

Knowledge Regarding Different Types of Credit Cards- Complete Guide:

In addition to convenience and flexibility, credit cards also bring access to building credit. Credit cards also entered the new millennium’s financial horizon. With thousands of offerings in the huge and diverse credit card world, there is something created to meet every kind of need and every financial situation. It is indeed one of the most fundamental and core things you need to know about knowledge about different types of credit cards there are because such factors play a very important part in knowledge to make informed decisions and reap their maximum benefits.

This subject will introduce you to different types of credit cards, their features, pros, cons, and appropriateness to different individuals.

I. Basic Credit Card Types

All other credit cards belong to large categories based on the large purposes and sequence order of the priority hierarchy of the credit cards.

1. Traditional Credit Card:

Definitions: The norm in the general class of credit cards offering leeway to consumers to purchase worthless products and others to utilize them for something else. The general class will be most likely to have general coverages like revolving credit, monthly cycle, and minimum payment.

Features are:

-Variable APR interest rates.

-One’s creditworthiness as the foundation of the credit limit.

-A minimum guarantee on purchases.

-Limited rewards or cash back can be earned.

Advantages are:

-Convenience while fulfilling daily expenditure needs.

-A becomes a credit history component with proper usage.

-Shock absorber for one-time short term expenses.

Disadvantages are:

-Interest rates usually remain high on balances carried.

-No meaningful rewards can be earned.

-Debt accumulation through misusing.

Use of one high quality credit where the use of an all-purpose credit card for fulfilling daily transactions will be on the right track.

2. Rewards Credit Cards

Definition: Reward credit card is an entitle to get rewards for spending in the form of cash back, air miles, or commodities as cover charge by the company on behalf of its card holders. Such cards are issued as an entitle to card holders as well as to their business.

Categories:

-Cash Back Credit Cards: Return percentage of spending, in cash.

-Travel Reward Credit Cards: Offers a clear way of redeemable miles or points on travel, hotels, and all that pertains to travel expenditure.

-Points Accumulation Cards: Earn points, at least, for reward in the form of gift cards, merchandise, or travel.

Features:

-Award rate different based on class of spending.

-New customer spending bonus on spending some money.

-Other benefits like travel insurance and extra protection, etc. There can be fees yearly.

-Reward for spending cash day by day.

-Allows the user to accumulate much travel or receive some decent benefits overall.

Weaknesses are:

-Requires much outlays to accumulate optimum rewards.

-Annual fees will exceed rewards.

-A bit tedious to utilize, if indeed anybody purchases it, to settle the rewards programs.

Ease of use:

-The card is appropriate for a user spending much and best utilizing the rewards programs.

3. Balance Transfer Credit Cards:

Definition: Cards to pay off existing credit card balances and roll them over. They would normally offer 0% APR for a promotional period on balance transfers.

Characteristics:

-0% APR on a promotional balance transfer basis;

-Balance transfer fee (typically some percentage of the amount transferred);

-Regular APR after the promotional period.

Benefits:

-Saves interest cost for promotion period;

-Makes debt easier to manage by rolling over multiple balances;

-Affords time to repay debt without interest being imposed.

Disadvantages:

-Balance transfer fees can beastronomical;

-After intro period ends, high APR;

-May not be suitable for new purchases for the intro period.

Best Option:

To a consumer who already has existing credit card debt and wants to consolidate and pay out his or her debt.

4. Low-Interest Credit Cards:

Definition: It provides sub-average APR to balance-carrying borrowers.

Features:

-Lower APR than average credit cards;

-May have low rewards or benefits.

Advantages:

-Save interest fees;

-Lower total cost of carrying a balance.

Disadvantages:

-May have higher yearly fees with tight credit standards;

-May not be a good fit for heavy rewards.

Best For:

For borrowers who usually carry a balance and want to keep interest costs low.

5. Secured Credit Cards

Definition: It has a security deposit, which is the credit limit. It is designed for people with bad or limited credit history.

Features:

– Collateral deposit is required.

-Credit limit is such deposit.

-Unsecured cards can be had based on good behavior.

Advantages:

– Very good for building your credit history if used responsibly;

– Easy to get for poor credit;

-Less offer risk to issuers as deposit is secure.

Disadvantages:

– Being a secured credit card, there is a deposit.

– Not typically rewarded as much as other benefits;

-Deposit is not returned until account is closed.

Best For:

For those who have bad credit or poor credit and would like to open or reestablish their account.

6. Student Credit Cards:

Definition: Credit cards issued to college students with minimal or no credit history and are usually equipped with rewards that are more beneficial for students, i.e., book buying discounts or paid-subscription online usage.

Characteristics:

-Have a low credit limit.

-May reward student-purchases with something extra.

-May provide some sort of credit management advice.

Benefits:

-Opens college credit;

-Reward buying to a student;

– Extend credit during need.

Drawbacks:

-Low credit limits;

-May have extremely high APR rates;

-Easy to get oneself into debt if not so watchful.

Utilitarianism:

Perfect for students in college who need to set up credit and learn to manage a budget.

7. Commercial Credit Cards:

Definition: It can be utilized by a businessman, business spending inspired to business such as charge monitoring, employee card issuing, reward on business spending, etc.

Features:

-Very high credit-worthy value.

-Expenditure tracking and reporting facility feature.

-Personal business spending value variant employee card.

-Reward on purchasing company material or company tour.

Advantages:

-Elimination between company expense and personal expense.

-Proportionate ease of tracking and reporting of expense.

-Reward as business expense.

-Issuance of business credit.

Disadvantages

-Raising finance from individuals.

-More room for potential of annual fees.

-Big company good credit.

Adequateness:

Ideal for individuals in business who would like to use use adequateness in firm and personal finance.

8. Travel Credit Cards (In-Depth Analysis):

Travel cards are to quote a list of award cards such as in-depth analysis.

Airline Credit Cards:

-They carry the cost of subsidizing an air adventure.

-They earn air miles for the airline they fly on.

Advantages:

-Instrumental, checked bags, priority boarding, lounge, and friend passes.

Disadvantages

Fewer redemptions, miles expire.

Hotel Credit Cards:

They and a hotel chain are involved in an exclusive.

-Accept one hotel chain membership points.

Disadvantages:

Less opportunity to redeem, point expire.

General Travel Credit Cards:

They have the negotiating power of flexible travel rewards to negotiate with flights, hotels, and travel fees.

Downsides

Other redemptions, travel insurance with no foreign transaction fee.

Restrictions

II. Specialty Types of Credit Cards

Specialty credit cards, rather than general, are one-of-a-kind, single-use cards.

1. Store Credit Cards:

Definition: Given by an individual store to customers and applicable only within their store.

Features:

-Discount and promotion at issuing store.

-May also include some special financing opportunities.

-Easiest to qualify for generally among other general-purpose credit cards.

Advantages

-Discount and saving in fashion stores.

-One only in issue store.

-Gastronomically high APRs on most of them.

-May lead to overbuying.

Usefulness:

Most appropriate to a buyer purchasing in great quantity from one source.

2. Premium/Luxury Credit Cards:

Definition: Utilized in extending luxuries and luxury privileges to extremely wealthy consumers.

Features:

-Ultra-high credit lines.

-Concierge bank service.

-Airport lounge privileges.

-Travel coverages and insurances.