Types of credit cards explained

Credit cards can be a useful addition to your wallet, if you choose the right one and use it properly. A lot credit card rewards come with various benefits, such as cash back or travel rewards. And if you’re a student looking for your first credit card, or if you’re struggling with credit card debt, finding a card that meets your needs can save you money. save your time and money. So it is important to know How to choose a credit card it’s right for you.

Types of credit cards

Rewards card

A credit card is a card that allows you to earn points, cash back or airline miles on purchases. Some cards have a fixed cash back rate, while others offer higher points on purchases made in specific spending categories. Rewards cards offer a set percentage of cash back or points on every purchase made with your credit card, and are ideal for cardholders who want a fair compensation structure. On the other hand, premium rewards cards offer higher returns on purchases in different categories, such as travel and dining. Using a credit card is an easy way to get cash on purchases you’ve already made.

Redeem options for cash back rewards vary between cards, and may include debit, checking, direct deposit, merchandise and gift cards. Travel rewards can be used for flights, hotels or other expenses such as rental cars.

Check out Kiplinger’s selection for Best rewards card of 2023.

Balance sharing and 0% APR cards

A balance transfer card is a credit card that allows you to transfer balances from other accounts to it in order to avoid paying a high interest rate. APR (annual percentage rate). Many balance transfer cards offer 0% introductory APR for a set period of time to help cardholders avoid paying expensive interest on existing debt.

However, a balance transfer almost always charges a balance transfer fee of about 3% to 5% on the amount owed. to translate. In addition to credit cards, some balance cards will allow you to place other types of debt on the card, such as auto and personal loans.

Similar to balance transfer cards, other cards offer 0% APR introductory offers on new purchases.

Check out Kiplinger’s selection for Best transfer card of 2023.

Travel card

For frequent travelers, choosing a travel ticket can be an important tool. Tickets are designed to earn cardholder points or miles that can be used to pay for travel expenses. It also comes with additional benefits that travelers will love, such as free checked baggage, rental protection, lounge access and priority check-in. . Many also have no foreign exchange fees. Some travel cards allow you to redeem points or miles through airlines and hotels, while others are tied to a specific airline, like Delta or United.

Check out Kiplinger’s selection for Best travel rewards card of 2023.

Student card

Student credit cards are a type of “starter card” for college students with limited credit history. Because they are designed as a way for young adults to start building credit, they don’t usually have strict approval requirements or carry annual fees. Many student cards also offer rewards in areas that interest students, such as cash back on dining and entertainment, while others make it easy to earn rewards on matching payments for them. card holders as they begin their credit journey.

Check out Kiplinger’s selection for Best student credit cards of 2023.

Security card

Secured cards are available for those with little or no credit history or bad credit. With a credit card, your credit limit is determined by how much cash you make up front, so you can still start building credit history, but the lender doesn’t have to get in the way. are you. These cards usually don’t have the same credit strength as most cards, but they’re a good place to start if you’re looking to build up your credit. top up credit or improve your bad credit. In fact, some secured cards will automatically upgrade you to an unsecured card if you demonstrate a history of good credit management.

Small business credit card

As the name suggests, mini credit cards are used to make purchases and help keep your business and personal expenses separate. To qualify for a business card, you must provide financial information about your business; Even if your business is financially sound, the lender will need additional assurance that you and your business are a good credit. For this reason, most small business cards require personal verification, which means that you as the owner of the business will have a difficult search to pull on your own credit report, it may lower your score for a while.

Of the Best business card come with important benefits, such as employee cards, expense reports and in some cases, cash back rewards that allow you to earn on purchases made by your business.

Credit card deposit

Some retailers offer credit cards. Depending on the card, these can be used only at the specific store, while others can be used anywhere. Purchase credit cards allow cardholders to receive in-store discounts as well as earn points or cash back when shopping at certain locations. Credit cards usually have an easier time getting approved than other credit cards, but be careful – credit cards often have higher interest rates. Opening a credit card for a place you shop regularly can be an easy way to save cash, as long as you pay off your balance on time.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect the views of Nasdaq, Inc.

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