There are dozens of credit card issuers and hundreds of credit cards overall. Identifying the sort of credit card you desire depending on your needs is the first step in selecting your first credit card. There are many different credit card types available, from simple cards with a few extras to expensive cards with lots of perks and advantages.
Traditional "Vanilla" Credit Cards
Because they don't offer rewards or extras, standard credit cards are sometimes referred to as "plain-vanilla" credit cards. They are also fairly simple to comprehend. If you want a credit card that isn't complicated and you're not interested in collecting rewards, you might choose this type of card.
You are permitted to carry a revolving amount on a normal credit card up to a certain credit limit. When you make a purchase, your credit is depleted, and after you make a payment, additional credit becomes available. At the end of each month, a finance charge is added to any unpaid account. To avoid late payment fees, credit cards contain a minimum payment that must be made by the specified due date.
Credit Cards With Balance Transfers
While many credit cards allow for balance transfers, a balance transfer credit card is one that does so for a brief period of time and at a low introductory rate. A balance transfer is a smart option if you want to save money on a high-interest balance on an existing card.
There are different balance transfer interest rates; some are as low as 0%, but they typically include restrictions like a fee for each transfer.
The card becomes more appealing as the promotional rate decreases (and the promotional period lengthens).To qualify, you'll often need good credit, though.
Cards with rewards
Rewards cards, as their name suggests, are those that give rewards for using a credit card to make purchases.
Cashback, points, and travel rewards cards are the three most common types. While some consumers prefer points that may be exchanged for cash or other goods, others prefer the flexibility of cashback incentives. Due to the opportunity to accumulate free flights, hotel stays, and other travel benefits, travel rewards cards continue to be a favorite among frequent travelers.
Cards for students
Student credit cards are ones that are made especially for college students, who frequently have no credit history or a very limited credit history. A student credit card would often be easier to obtain and be approved for than another kind of credit card for a first-time credit card applicant.
Although student credit cards may offer extra benefits like rewards programs or reduced interest rates on balance transfers, these aren't the most crucial characteristics for those seeking their first credit card. A student credit card is often only available to those who are enrolled in a recognized four-year university.
Charge cards don't have defined spending caps, and at the end of each month, the entire balance is due.
Because the debt must be paid in whole, charge cards normally do not carry financing charges or minimum payments. Depending on your card agreement, late payments may result in a fee, charge limitations, or card cancellation.
To be eligible for a charge card, you normally need to have a solid credit history.
Credit Cards With Security
Secured credit cards are an option for those with poor credit histories or no credit histories at all. A security deposit must be loaded onto secured cards. 6. A secured credit card's credit limit is normally equal to the deposit paid on the card, but it may be higher in specific circumstances, such as when there has been a significant default, like missing a mortgage payment. It's important to remember that the balance on your secured credit card must still be paid in full each month.
Cards with Poor Credit
One of the worst credit card products is subprime credit cards. These credit cards, which frequently feature high interest rates and fees, are targeted towards applicants with poor credit histories. Even for people with poor credit, acceptance is frequently swift, but the terms are frequently unclear. The federal government regulates the amount of fees that subprime credit card issuers may charge, but these regulations are frequently circumvented by card issuers by finding exceptions and workarounds.910
Subprime credit cards are not appealing, but some people keep applying for them because they have no other options for credit. In this circumstance, you must move forward at your own peril.
The cardholder must load funds onto the device before using it. Purchases are made using the available balance on the card. Until new funds are loaded onto the card, the spending cap is not renewed.
Prepaid cards don't have finance charges or minimum payments because the balance is deducted from the deposit you've made. These cards are not true credit cards, nor do they directly assist you in repairing your credit. Although they are not connected to a checking account, prepaid cards are comparable to debit cards. They are frequently used by many people as a means of spending less.
Cards With Limited Use
Only certain locations accept limited-purpose credit cards. With a minimum payment and finance charge, limited-purpose cards function similarly to credit cards. Examples of credit cards with a limited function include store and petrol cards.
Commercial Credit Cards
Business credit cards are exclusively for commercial use. They give business owners a simple way to distinguish between business and personal transactions. There are common charges and credit cards for businesses.
Your personal credit history is taken into account even for corporate credit cards because the credit card issuer still needs to hold an individual responsible for the credit card debt.
Questions and Answers (FAQs)
Which rewards credit card is the best?
The greatest rewards credit card for you will rely on your spending habits and the benefits that make sense for you. A credit card that offers airline miles or hotel points as incentives, for instance, wouldn't make sense for someone who rarely travels, but it would be a terrific option for someone who does. You may always start with a cash-back credit card if you are unsure of the incentives you want.
What is the interest rate for various credit card types?
Your credit card's interest rate will vary depending on the card, the card issuer, and your credit rating, among other things. The average credit card interest rate in April 2022 was 20.66 percent.