Types of Credit cards: - What you need to know about them.

Nowadays, everybody wants to have at least a credit card. Everywhere you go you see adverts from various banks and other financial institution offering you credit card. However, before you apply for a credit card, there are several factors you need to consider. So it’s very important that you know more about the types of cards available, and one that will work best for you.

Secured credit card: -

A secured credit cards for people with bad credit requires a security deposit as collateral before you can get approval. Its type of card that best suit the need of people with no or poor credit who are trying to build their credit history. Your collateral must be equal or greater in value of the credit amount you are applying for.

 With a secured card you put up your own money (into a savings account with the bank you are applying for credit card) and that amount (or part of it) is the credit line for your card. Put in $500 and you could have up to a $500 credit line. You can deposit anywhere from two hundred to two thousand dollars into an account, and that will be your spending limit.

This will give you the flexibility of using a credit card and because if you pay off every statement you are letting creditors know that you can handle credit (again) and your bank may soon begin extending your credit line beyond what you have put in. So you are on your way back to healthier credit, to a status where you will no longer need a secured card.

Business credit cards: -

These are the card that’s available for business owners, directors and business executives. They come with several features just like any traditional credit cards. You have to consider the terms and condition for these types of cards too before applying.

Student credit cards:-

These are another type of credit card specifically for students. These types of cards are made for students because of their lack of credit history, and if given chance they can build their credit history with such card.

Prepaid credit cards are set of cards that are just acceptable wherever the traditional credit cards are acceptable, but they are not credit card. You will have to always transfer money to your card before you can make use of the card and you may not be able to spend more than you prepaid for the card. 

Presently this is almost the best card for people that want to avoid interest and other fees charged on traditional credit card and also for people with bad credit.  However, other little charges like monthly fees, application; over the limit and ATM fees are still applicable, but these gets offset if you pay your bills via money order

Whichever card you decide to choose make sure that you go over the terms applicable very well to avoid putting yourself in financial bondage. In second part of this article we will continue looking at other types of credit card.

Low interest credit cards:-

These are other types of non secured standard credit card. They offer either low introductory APR that change to a higher rate after a certain period of time or a low fixed rate. You can take advantage of the low introductory APRs to make larger purchases for now and pay them off several months later.  It wont be possible to get this credit card for people with bad credit

Air Mile Credit cards:-

These are cards that are good for people that travel frequently or planning to go on vacation. It’s a form of reward card that allow you opportunity of obtaining a free airline ticket. You will need to accumulate specified air miles before you can be entitled to free ticket. All accumulated mile points will be based on dollar amount of your credit card purchases over a period of time based on predetermined point level.

Specialty credit cards:-

These are other set of standard non-secure cards designed specifically for individual business users and students with unique and special needs.  

Make sure that you study the terms of any of the card that you pick very well to avoid risking your credit rating. Also, when you pick any of the reward cards make sure you study the forms and offers very well because credit card issuing companies do offer different reward programs and their promotional offers often change. So make sure you thoroughly look over the card’s terms and conditions of each specific card before applying.