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Different Types of Credit Cards: Which One Is Right For You?

Different Types of Credit Cards: Which One Is Right For You?

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Advance Personal Finance

Advance Personal Finance

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When it comes to credit card options there are so many different types and issuers that it can be a little overwhelming.  They all have their own strengths. It is all a matter of being able to find which card is right for your individual situation.  Below will walk you through the different types of credit cards that are available.

Rewards Credit Cards

Rewards credit cards are some of the most valuable and useful cards available to consumers.  Everyone spends money on daily expenses so why not get rewarded for it.  In terms of types of reward credit cards there are several types that you can choose from.

Travel Credit Cards

Travel credit cards can be broken down into a couple of different categories.  First Airline and Hotel credit cards which are more specific to one brand and their partners. Alternatively there are general points earning credit cards that will allow you to use you points on most travel related expenses.  These are great cards for people that are not loyal to one particular brand.  If traveling a lot out of the United States is regular for you then you might want to consider a card that has no foreign transaction fees.  One of the nicest things about travel credit cards is that most of them offer some sign-up bonus offers.

Cash Back Credit Cards

If you are not a big traveler then a cash back credit card might be the best thing for you.  A cash back credit card allows you to get a small percentage of each purchase back.  Most cash back credit cards will offer around 1% back, but there are a couple that offer a higher percentage for different categories.

Business Credit cards

Business credit cards are available to businesses of all size.  They come with a lot of the same benefits as personal cards like rewards and high sign-up bonuses.  The biggest difference is that they also add features that are helpful for business owners like free cards for their employees, higher credit limits and detailed expense reports.

It is important to understand that when you sign up for a business credit card you are personally liable for all charges.  That means if your business can’t pay back the amount you spend then it will negatively affect your personal credit score.

Student Credit Cards

For most college students it’s the first time that they have ever establish any type of credit.  This makes it pretty difficult for them to receive an approval from many credit cards that require excellent or very good credit scores.  Student credit cards go towards helping college students build their credit. These cards will put them in a better position when they get to the real world and look to take out their first major loan like a mortgage.

Student credit cards don’t come with many rewards and tend to have low credit limits, but you can always get an increase to the limit once shown that they are a responsible borrower.

Secured Credit Cards

Secured credit cards are geared towards people with bad credit.  These cards require collateral in order to get approved.  You will also need to pay a security deposit in order to receive the credit card.  Because this card is meant for people with less than ideal credit they come with very low credit limits.  Sometime it can be as low as $250 or $500.  Just like student credit cards these limits can be raised once you show you can responsibly repay what you borrow.

Wrapping It Up

With so many different credit cards available, it can be quite overwhelming.  By understanding what your specific goals are, you will be able to make a better choice and find a card that works best for you and your family.

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