Whether you are looking for a card that will help you get cash back on purchase, need to repair your credit, or simply want to have the security of a credit card in your wallet the first thing you need to do is decide which card is best for your needs.
With multiple credit card carries available there are hundreds of cards to choose from. Most of these, though, fall into 6 main types of cards:
Standard Credit Cards
As the name suggests, standard credit cards are your run-of-the-mill card. They typically do not offer a lot of reward features and the credit limit that you are given depends on your credit score and the issuer. Most issuers will offer standard credit cards to those with average credit and—in some cases—limited credit history. The interest rates on these cards have a wide range and typically depend on credit score.
Balance Transfer Credit Cards
Balance transfer cards are a type of credit card that allows a purchaser to move their credit card balance from one card to another. The balance transfer card typically has a lower promotional interest rate—typically lasting up to a year—that is significantly lower than the interest fee on a standard credit card. After the promotional fee is finished the interest rate will increase.
Premium Credit Cards
Often reserved for those with extremely high credit, premium credit cards often come with additional services and features. These may include travel insurance, emergency services, and other benefits in addition to a much higher credit limit than a standard credit card. To qualify for premium credit cards the applicant usually requires a near perfect credit score.
Rewards Credit Cards
A reward card is a type of credit card that entitles the purchaser to receive rewards after a purchase is made. This could be in the form of cash back, issuer “points” that can be traded in for hotels or gift vouchers, airline miles, or discounts. While a rewards card does provide a lot of additional perks compared to a standard credit card, the credit score required to qualify is often significantly higher as well.
Credit Repair Cards
For those with no or damaged credit there are a few credit card options available. The most common credit repair credit card is a secured credit card. A security deposit or some form of collateral is required—usually worth more than the credit limit—before the applicant will be approved. Interest rates are often extremely high and usually come with a low credit line (less than $500). If payments cannot be made on the card, the collateral or security deposit is used to clear any unpaid balance.
Specialty Credit Cards
Many credit card companies issue specialty cards for specific groups of people. Business credit cards are often used by business owners and include many features that a rewards card may offer. These types of cards can also feature business report management and other business-related perks.
Student credit cards are another type of specialty card. If a student is enrolled in a 2 or 4 year university program and have never had a credit card before, many issuers will offer cards. They often have higher interest rates than a standard credit card (as well as lower limits) but can be used to help students build their credit while enrolled in school.