Overview of Credit Card Types: Which Card Is Right For You?August 9, 2010 - 9:00 am
Credit cards have been around for years but with the changing times and changing ways of consumers, credit cards certainly aren’t what they used to be. With all the cards on the market today, it can be tough to decide what credit card company to go with and what type of credit card works best for you life.
Here we will take a general look at the types of credit cards you may want to consider:
What Are Reward Cards?
A popular choice for consumers who regularly make purchases at select locations, a rewards card does just what it says. Rewards card offer products, discounts, or even straight cash for all relevant purchases you make on the card. Some examples of rewards are discounted gas prices, points toward free merchandise, and air travel rewards. A rewards card can be beneficial if used correctly and redeemed per card agreements. Do pay attention to the interest rates on rewards cards as they can be higher than other types of card. Be clear about how the rewards programs work before signing up for the card to ensure that you are eligible for all the advantages the card offers. Finally, since the changes to the credit card industry courtesy of the CARD Act, credit card companies have pulled back on their rewards promotions to some degree so be sure to research which card makes the most sense for how you shop.
What Are Balance Transfer Cards?
This type of card specializes in accepting the balances of other higher interest credit cards to help consumers consolidate their debts. When you combine and transfer existing credit card balances onto a lower interest card, you have the advantage of saving money on interest charges and fees over time. Finding the right balance transfer card can be a little intimidating because they can all seem like a good choice. The most important aspect to research and compare between cards is not how much the interest rate is currently but what it will be after the promotional time period ends. In some cases, consumers can end up with a huge balance on a card that increases its interest rate 6-12 months. If the balance has not been paid in full, you may end up with more debt than you started with.
What Are Student Cards?
Believe it or not, there are credit cards designed specifically for student use. For those going away to college, the expenses are numerous so credit card companies are offering cards that cater to the college life. These cards may be easier to get for an 18 year old student who has no prior credit history and limited incomes. Generally student cards offer lower credit limits than traditional cards but many offer rewards that are ideal for college student such as discounts at restaurants, convenience stores, and for education or entertainment expenses. There are a number of student cards on the market so it is wise to compare rates, rewards, and individual card agreements before committing to one card.
What Are Business Credit Cards?
Business credit cards are designed for business owners, particularly for small to medium-sized operations. Business cards do often offer rewards that cater to the business’ needs for office supplies, travel, and general expenses. They are a great way to help entrepreneurs separate business expenses from personal ones and can have a significant impact on building a company’s credit history if used correctly. Most card companies offer the convenience of multiple cards for employee use that can be controlled by management to prevent fraudulent spending. Look for the best interest rates and for card companies that understand the needs of a growing business.
No matter what your situation is, there is likely a card on the market that is right for you. Compare the offers you are receiving in the mail and do an online search to find which card suits your financial needs. Credit cards can be a benefit to your credit score and are a convenient way to better manage your finances when used properly.