Comparing the Many Different Types of Credit Cards

The differences between credit cards go far beyond Visa, MasterCard, AmEx and Discover (although the payment network matters). What you’ll actually receive also depends on your credit score and payment history. The better both of those are the more options you’ll have. But it can be a blessing and a curse.

As the recession faded away, credit card companies have begun to loosen up a bit. As a result, there are more credit cards today than in years past. There are so many options, companies like CreditSoup.com offer to help consumers sort through all the offers to find the best option.

Until then, here’s a brief overview of some types of credit cards you’re sure to come across and other helpful tips for picking the right one.

Interest-Free Balance Transfer Credit Cards

An option that’s a popular financial tool for minimizing debt is interest-free balance transfer credit cards. The main appeal is getting an introductory 0% interest rate on all purchases and balance transfers within the first few months. You can transfer the credit card balance from an account that is charging interest to reduce the monthly payments. Having no interest also makes it easier to pay the balance down.

However, one thing to keep in mind is that most credit card companies charge about 3% on the total of the balance transfer as a one-time fee. Also, if you miss a payment it could cut your introductory period short.

Rewards Cards That Give Back When You Buy

Many consumers are drawn to rewards cards that give you a kickback for every dollar spent. Each card has its own unique reward system. Some give you cash back while others are based on points that can be used to redeem gifts.

It’s easy to see the something for nothing appeal of rewards cards. Just keep in mind if you don’t pay the balance in full every month then interest will diminish the value of the perks.

One thing to factor in is where you spend the most money. Some rewards cards offer double or triple points for certain types of purchases. Airline and travel cards are a popular reward card subcategory With an airline or travel card you’ll learn extra points for travel expenses that can be used for free travel down the road.

Rebuild Your Credit With a Secured Credit Card

Did you run into a rough financial patch? For many of us, all it takes is a big unexpected expense to fall into a credit score spiral. When your credit score takes a hit it can be difficult to get a credit card or any other type of credit. Secured cards offer a solution.

A secured credit card is backed by collateral and acts more like a debit card. Basically, the amount of money you use as collateral is your credit limit. The goal is to show that you’re responsible with managing credit accounts so your credit score increases.

Visa, MasterCard, AmEx and Discover

Credit card payment systems don’t affect the interest rate, credit limit or terms, but they do impact where the card is accepted. A payment system is basically the technological brains that make it possible to swipe or stick a card in a device and have it register as a transaction with your credit card issuer.

Having a credit card payment system that keeps on the cutting edge is important in today’s digital world. Businesses are using a wide variety of payment processing systems to expand their ability to get paid or make a sale. The big four credit card payment systems have to continually work to improve their acceptance if they want to keep customers.


Categories: Credit Cards

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July 17, 2017 Comparing the Many Different Types of Credit Cards