Are you considering applying for a new credit card? Whether you’ve already got a credit card or are looking at getting another one, it’s worth considering the different options that are available. Each of the different types of credit cards serves a different purpose, suiting different needs and goals.
Spending some time figuring out which credit card is best for your lifestyle may end up with you saving more money and opening doors to new opportunities.
Before applying for a new credit card, you should check out your credit report. You need to do this to make sure that there aren’t any mistakes on your report that may affect your credit score. Bad credit scores lead to higher interest rates on your credit card. If you come across any mistakes on your credit report, you should dispute them and get them sorted out before applying for your new credit card. You can find out more about how to dispute your credit report here – https://www.crediful.com/experian-dispute/.
Types of credit cards
There are hundreds of different types of credit cards spread across dozens of credit providers. The first step to selecting one is to understand your needs and what you will end up getting out of the credit card. There are basic credit cards with ‘no-frills’ attached as well as premium credit cards that come with several perks and benefits. The benefits, and whether you will use them, will depend on your lifestyle.
Standard Credit Card
These are the most simple and easy to understand the types of credit cards. They come with no frills or rewards attached to them. Those who are looking for a simple credit card and aren’t interested in earning rewards may go for this type of credit card.
A standard credit card will allow you to have a revolving balance up to a previously agreed upon credit limit. If you reach your limit, then more credit will only become available once you make payment. You will also be charged interest on your outstanding balances at the end of each month, with a minimum amount that will need to be paid by a certain due date.
Travel Rewards Credit Card
After standard credit cards, travel rewards credit cards are probably the second most common. There are three types of travel rewards credit cards: hotel, airline, and flexible. There are airline and hotel loyalty programs that offer their credit cards that give you bonus points when supporting their brand. Some may also be linked to brands within other categories, like gas or groceries, that you can also get bonus points for. It’s quite common for these types of credit cards to have additional loyalty benefits, like priority boarding on flights or free hotel night, stay on your birthday.
Flexible travel credit cards are through normal credit providers who offer their travel rewards without exclusively partnering with a specific hotel chain or airline. These cards offer bonus points on any travel, regardless of the provider.
Retail Rewards Credit Cards
These are credit cards that are co-branded with major retailers. You can buy from a particular retailer with your available credit, and you will also accumulate points on your spending. These points can then be redeemed for products or services from the same retailer. It’s advised to avoid carrying a balance over each month with these types of credit cards, as the interest rates tend to be higher.
Balance Transfer Credit Cards
Balance transfer credit cards allow users to transfer their current credit card balances in the hope to have less interest. These cards usually have a 0% introductory annual rate for a specific period. You can use this credit card to pay off your existing credit card debt that is being charged interest on and then rather start paying off your debt on the interest-free card.
There are general gas cards and brand-specific gas cards. General gas cards treat all gas companies equally, while brand-specific ones favor a particular company. These types of cards would normally give you a certain percentage back when purchasing gas as well as offering you credit to use on gas.
Brand-specific cards would generally offer a higher rebate, so if you are brand loyal to a particular gas company, then this could be the better option for you.
Student Credit Cards
Student credit cards will generally have a low credit limit, though they will come with some rewards. Some are linked to the students’ grades, offering credit for maintaining a 3.0-grade point average. They will also generally offer a certain percentage in cashback and bonuses for on-time payments. If paid on-time, these cards help students get a good credit score to qualify for other credit cards after graduation.