Learn about the Different Types of Credit Cards

There are many types of credit cards to select from. Read on to eliminate the confusion and decide which is best for you

With all the different types of credit cards available, choosing the right one can be challenging. Touching on everything from instant approval to cash back cards, let’s sort it out.

There are so many types of credit cards out there that picking the one suited to your situation can be a challenge. Seems like a new card is being offered every day. In order to choose a credit card, you need to understand what all the terms mean before you apply for a credit card.

Low interest and 0% interest cards

These types of cards are the latest ones to hit the market. The idea is to get the consumer to apply for or upgrade to a credit card that offers a lower interest rate. Card companies are very competitive in this area and you, the consumer, can benefit if you know what to look for and how to use it.

Low interest cards are just that. There is a lower than usual APR on balances held over the billing period. These rates can be as high as 24% in some cases, so when you get a chance to hold a card charging 17%, that’s a benefit. That translates to a savings of $7 interest per $100 balance.

Some of these cards even give you the opportunity to transfer existing balanced to the new card at a lower rate of interest, sometimes even at 0% interest for a limited time. This is very useful if you have a decent size or large balance outstanding and need to save some cash to pay down your balance.

Rewards points and cash back cards

These types of cards are increasing in popularity now. These types of credit cards are very simple. For every purchase you make with the card, you earn what are called “reward points” towards gifts, premiums or discounts on merchandise. Some of these can be significant like trips, appliances and/or clothes. Check with your credit card company to find out what rewards they offer, if any.

Cash back credit cards are similar to rewards points cards except that they pay you back a percentage for purchases made on the credit card. This is usually reflected as a reduction in the balance on your monthly billing statement. These cash back rewards are nominal at around 1% or so, but it’s still free money to you.

Instant approval credit cards

This term is a little misleading in and of itself. Although your application can be instantly approved, you may not have actual credit to use instantly. Big difference there, I would say. Some card companies will give you a provisional (temporary) card to begin charging while others will be more careful about issuing actual credit.

In all situations, it is smart to read the terms before applying so you know what to expect and don’t get surprised. Every consumer is different and requires a different credit card type. Remember that over-applying can damage your credit history, so don’t just go apply for every card available and hope the numbers work in your favor.

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