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Have you ever noticed that almost everyone you know has at least two different types of credit cards, including yourself? More to the point, credit cards don’t just differ by the card issuer, but by their type as well. Here are some of the most popular credit cards and ways you can use them.
1. Standard credit cards
These types of credit cards are also called “plain-vanilla”. The reason for that is pretty simple: they don’t offer any rewards. Most people who go for these cards aren’t interested in rewards and just want something easy to grasp and understand. These cards allow you, the customer, to have a revolving balance to a given limit. Whenever you buy something credit gets used up and whenever you’ve made a payment credit is made available. At the end of the month there’s a finance charge applied.
2. Reward credit cards
The name says it all really, but these types of credit cards allow you to earn rewards based on purchases made with that particular credit card. Although they all fall under one category, there are three different sub-categories of reward cards if you will: cashback, points and travel. The most common card type by far is cashback, but points credit cards aren’t too far off. Travel cards are popular among travelers because of the rewards these cards offer: free flights and hotel rooms to name just a few. These type of cards usually offer the best credit card signup bonus.
3. Student credit cards
Student cards are aimed at college students who have little to no prior credit history. If you’re applying for a credit card for the first time, apply for a student credit card as it’s the most likely to get approved. You do however have to be an actual student at a four-year university just to be able to apply.
4. Charge cards
It’s difficult to obtain a charge card because you need good credit history. These cards don’t have a fixed spending limit and all of the balances have to be sorted out by the end of the month. They don’t come with a finance charge (most of the time) simply because the outstanding balance has to be paid in full anyway.
5. Prepaid cards
With a prepaid card, you have to deposit funds into the card before you can use it and spend money. One interesting thing about prepaid cards is that the spending limit will not renew on its own unless you load more money into the card. However, these types of cards don’t have the finance chargers we talked about earlier. In fact, prepaid cards aren’t considered credit cards since you don’t make regular payments and only top up when you want to. To that extent, it’s worth noting that you can’t rebuild credit score with a prepaid card.
Conclusion
Although there are over a dozen more cards, these are the most popular one you’re most likely to encounter on a day to day basis.
