Different Types of Credit Cards
PLEASE NOTE: I am not a financial advisor and do not have a financial degree/certification. This blog post shows the different types of credit cards and their associated specifications. If you are interested in any of the credit cards on this list please do your own research and speak to a financial/credit advisor if you have any questions.
To begin let's first define some things. “What is a credit card?” A credit card is a line of credit given on a card which allows you to make purchases up to a certain dollar amount limit. When an individual is approved for a credit card, there is an agreement between the individual and the creditor that the individual awarded the credit line will pay off the balance that is spent. It is not wise to get a credit card, use it, and decide not to pay the creditor back. There are consequences for that. Your credit score can be negatively impacted. For some examples of consequences for not making credit card payments, please see my “Breaking Down a Credit Report” post and my post “Thinking About Getting a Credit Card?”.
What are the different kinds of credit cards?
Secured credit card
Unsecured credit card- An unsecured credit card are cards that do not require collateral/ cash be put down to be approved. These cards are mostly awarded with lines of credit solely provided by the lender. Be sure to pay your balance monthly and not miss any payments. If you miss a payment it could result in a late payment fee as well as a late payment notice which is sent to the credit reporting bureaus and reports on your credit report, which could drop your credit score.
Charge credit card- A charge card is a payment card where the individual must pay off the balance in full by the designated due date. You may not be allowed to pay the balance off over time with minimum payments. Some charge cards like ,AMEX ,will give some wiggle room but it is not an option they allow you to use frequently.
Store credit card- A store credit card is a credit card that’s associated with a physical or online shopping store. These cards have credit limits similar to an unsecured credit card.
Business credit card- Business credit cards are cards that are mostly applied for by business executives and business owners. A business credit card helps to keep business expenses separate from personal charges. Business cards sometimes come with perks like, office supply discounts, travel benefits, and cash back.
Invitation only credit cards- Invitation only cards are cards that can only be applied for if you are invited or meet the designated requirements. Examples of these kinds of cards include the Amex Centurion Black Card. These types of cards often have high credit limits.
Student credit cards- Student credit cards are credit cards that are marketed towards enrolled college students. Most student cards have no or low fees, but usually have high interest rates.
Travel credit card- Travel credit cards are cards that provide travel perks to card holders. Many travel cards allow the card holder to convert their purchase reward points into airline miles, discounts, or cash back. These cards sometimes come with high interest rates and higher annual fees as a result of the many perks they offer.
Hotel credit cards- A hotel credit card is a credit card that reflects a partnership between both a hotel franchise and a credit card company that offer points and discounts to card holders for making purchases at any of the hotel’s affiliate companies. This can include hotel stays and restaurant meals.
Cash back credit cards- Cash back credit cards are cards that offer you a percentage of money back after making purchases with the credit card. Some credit card companies offer 2.5 percent cash back and as low as 1 percent cash back. Most business owners and big spenders use cash back cards. Two percent doesn’t seem like a lot, but if the card holder is spending $200,000 a month the cash back adds up over time.
Have you heard about bankrate.com?
To keep up to date with credit cards, I use bankrate.com. Bankrate.com is one of the most trusted online financial information sites on the web. The website breaks down different rates for mortgage refinancing, home purchasing, personal loans, credit cards, banking, and car insurance for many different companies, instead of you having to jump from website to website comparing rates yourself. Bankrate.com has different tools on their website that can help you understand what your options are and what the current market offers.
On the credit cards tab on bankrate.com you can see the different credit card types as well as the recommended credit score needed to be approved, the card’s various features, reviews on the card, and card details. The card details section on the website breaks down the card features even more! Bankrate.com does a great job of updating their site frequently so you don’t have to worry about being misinformed.
Bankrate.com can help you view different credit cards and other important information that you may want to know, like, information regarding home loans, auto loans, and personal loans etc. It’s a great one stop shop.
Thank you for reading my post “Different Types of Credit Cards” It’s great to learn about what options you have available to you that can help you save money. If you are looking for a credit card, please make sure that you do research and understand the APR or any fees that are associated with the card. If this blog can help someone understand what their options are for credit cards please feel free to share. Also if you are new to Millennial Oaks please subscribe. Are there new kind of cards that are coming out this year or next year? Was there a card type that I didn't list above? Please feel free to comment below.