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The following is a guest post by Chris Philp. Enjoy!
What Different Types of Credit Cards Are Available?
There’s a vast array of credit cards available in the marketplace today. Searching for a ‘credit card’ online brings up a huge list of offers, each with a number of benefits and rewards. If you are searching online though, you should be sure to check the differences between each card to ensure you find the right card and type of benefits for you.
Standard Credit Cards
When applying for a standard credit card, the applicant and provider both determine the appropriate fixed credit card limit. The balance for the card can be paid as soon as you’ve used your card. In order to avoid any charges, balance repayments should be made within your interest free period (usually 30 days or so). You can however, if willing to incur the agreed interest fee charges, spread the payment over a period of time. The minimum repayments for the card must be paid in order to avoid penalties and further charges.
Travel Reward Cards
Rewards cards, such as travel rewards cards, include benefits specially designed to suit the spending needs of frequent flyers or travellers. Credit card providers often have relationships with other companies in order to provide the card holders with special benefits from membership reward programs. These benefits can allow you to earn rewards points as you spend. Points can be redeemed for cash, or go towards paying for flights with a number of different global airlines. Some cards are also linked to specific airlines and partnered companies, often giving the card holder other rewards to benefit from.
As charge cards do not have pre-set spending limits, they are regarded as more flexible, allowing card holders to determine their limits based on their spending habits. Anything spent is expected to be repaid each month as agreed by the provider’s terms and the cardholder. If card holders have a remaining outstanding balance on their card, a fee is charged. This fee is typically a percentage of the overall remaining outstanding balance.
So, remember, if you’re searching online for credit cards, make sure you take the time for find the best and most appropriate type of card for you. Applying for credit cards online also affords applicants the flexibility of applying outside of the normal bricks and mortar bank opening and closing times.
Different credit cards offer a number of benefits and rewards, so why not see what’s available to you!
How about you all? What type of credit card do you use? What type of credit card is best suited for you? Have you ever used charge cards?
Share your experiences by commenting below!
Jacob’s Thoughts – Listed below are my random thoughts as I was reading this article.
- Thanks for sharing this article, Chris! I enjoyed it, and credit cards are a very important component of the majority of consumers’ spending lives.
- When you’re just starting to look for a credit card, it can be very intimidating due to the copious number of options available. Every credit card provider seems to be desperately pushing for your business/debt these days!
- The most useful credit card comparison site I have found/use is Creditcards.com.
- I like the layout of the site because it allows you to screen credit cards based on certain criteria, such as cash back cards, cards with balance transfer offers, travel rewards cards, and no annual fee cards.
- This screening feature is important to me because I have a very specific type of credit card that I like.
- For me personally, the two most important features of a credit card are 1) no annual fee and 2) cash-back rewards. The two cards that I’ve found best suited to my needs are two Chase cards.
- For general, everyday purchases, I use the Chase Freedom credit card. It has no annual fee, and provides 3-5% cash back in rotating categories throughout the year. Nice!
- For gas purchases, I use the BP Rewards Visa card. It provides 5% cash back for all purchases at BP gas stations, all for the price of FREE (no annual fee).
- In deciding which type of credit card to apply for, it’s important to consider your spending habits and financial tendencies. For example, if you have the tendency to accumulate a credit card balance, the most important factor in your credit card search is finding a low-interest rate (APR). If you like to participate in balance transfers, you will need to search for cards with low balance transfer interest rates and fees.
- However, the one universal trait that I would encourage all consumers to look for in their credit cards is that the card does not have an annual fee. I’m not convinced that cards with annual fees provide any added benefit in today’s competitive bank environment.
- @ Airline credit cards- Airline credit cards generally carry annual fees, so you’d need to examine if the rewards you accumulate through the use of an airline credit card will warrant the annual fee. Typically, if you are traveling all of the time (particularly on business where you’re being reimbursed for the plane tickets by your company), an airline card will be an effective purchase. However, if you only fly sporadically, I’d recommend a cash-back card.
- @ Charge cards – Charge cards, in my opinion, are a fairly dangerous thing for most consumers. This stems from the fact that you are obligated to pay back the entire balance each month, and if you don’t come through on this, you can be charged a large amount of fees and interest.
***Photo courtesy of flickr.com