The World of Credit Cards

Credit cards are a great way to build a person’s financial future. However, it is not in a person’s best interest to sign up for just any credit card offer they find. This is because depending on a person’s situation, they might be able to find a credit card offer that can provide better rates, rewards or in some cases even both. There are also credit cards that can help repair a person’s credit. Indeed, the sky’s the limit when it comes to the types of credit cards available. This article will discuss each of them in greater detail. 1. Credit Cards Designed for Balance Transfers The balance transfer credit card is designed for individuals who are looking to lower the interest rate on an existing credit card. How it works is simple. The company offering the balance transfer credit card will allow for a 0% APR on balance transfers for a fixed period of time, (usually 6 months). No interest is charged, which usually means no monthly payments until the end of the term. When the 0% APR does end, a person is expected to pay at a more ‘normal’ interest rate. Credit card companies win with balance transfer cards because many customers don’t bother with trying to pay their balances off. This is particularly the case if they think the other company is providing a lower APR even when the introductory 0% APR ends. Yet, this is not the best way to go about handling a balance transfer card. It is better to pay off the balance completely, so no debt is acquired on the new credit card. And by the fact that most balance transfer credit cards offer at least 6 months of 0% APR, a person has plenty of time to make sure their balances are paid in full. 2. Credit Cards with Lower Interest Rates Credit cards with lower APR can either offer it throughout the time a person uses the credit card or on a temporary basis. If it is the latter, the APR will increase after the introductory APR period ends. Low introductory APR’s are often most beneficial when used for big-ticket purchases. 3. Rewards Credit Cards If a credit card has a rewards program, a person is eligible to get something ‘extra’ each time they use their credit card. One of the most common types of rewards credit cards are those offering free airline miles. Every purchase that is made on a credit card earns a person a certain amount of points that can be used towards airline travel. The more that is spent, the more miles a person gets. Then there are the rewards credit cards that offer cash back. Some of these credit cards work similarly to credit cards offering airline miles. This means that the more the card is used, the more cash a person can get. Other cash back cards determine their cash back amounts based on which merchant is used. Either way, both types of cash back cards will usually offer 1% back. The final type of rewards credit cards offer rewards for a variety of things. These rewards could come in the form of merchandise, gasoline or store discounts. Regardless, they will all work the same way: if a person accumulates enough points, they become eligible for their reward. It should be noted that some rewards credit cards do charge annual fees to cover the privileges that they offer. This annual fee ranges from $40 to $100. 4. Credit Cards Designed for Credit Repair Two types of credit cards are available for individuals with bad credit: secured credit cards and prepaid credit cards. Secured credit cards are available to persons with collateral, such as a car, jewelry, or financial account. Liquid funds in a bank account can also be used as collateral and is perhaps the most common form of security for these credit cards. In either case the amount of credit that is granted will depend on the value of the collateral a person has access to. On the other hand, prepaid credit cards work based on how much a person invests on their credit card. For example, if a person puts down $100 on a prepaid credit card, that’s how much they have available as far as their credit limit. Prepaid cards are a great option for individuals looking to build up their credit without worrying about interest charges, though they still need to be careful since prepaid cards may have other fees associated with them. 5. Business Credit Cards Business credit cards work just like any of the credit cards mentioned in this article. However, in order to be eligible for one, a person must have a legally established business. As long as a person fits this criteria, business credit cards can be an excellent way to finance one’s enterprise. They offer significantly higher credit card limits than regular credit cards and they keep personal funds separate from business funds. 6. Student Credit Cards Student credit cards are a great credit card option for college students who have not yet established a credit history. They do not offer as many benefits as regular credit cards, but with wise budgeting, they can still be quite an asset in helping a young person acquire a good credit score. Credit cards come in a variety of packages with varying terms, conditions and repayment programs. Consider your needs and habits before focusing on the type of card that maybe best suited for you. Be sure to read all of the terms and conditions for each type of card before applying.