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With the array of different credit cards, choosing the right credit card for your financial needs does not have to be complicated. Read on to learn about nine different types of credit cards on the market today.
Different types of credit cards:
- 0% Intro Credit Cards
- Balance Transfer Credit Cards
- Business Credit Cards
- Cash Back Rewards Credit Cards
- Gas Rewards Credit Cards
- Secured Credit Cards
- Student Credit Cards
- Travel Rewards Credit Cards
- Unsecured Credit Cards
1. 0% Intro Credit Cards
Credit cards are generally known for their usually high APRs ranging from 14.9% to 36.9%. That said, you can also find many credit cards that offer 0% intro APR for a certain amount of time, like 12-24 months.
These types of credit cards are sought out by those who may want to make a big purchase and cannot pay it back in full the next month and will have the option of paying it off within a designated time without interest.
It is important to note that the 0% intro APR expires after a particular time and will have a set APR after that.
2. Balance Transfer Credit Card
A balance transfer card is ideal for those with excellent credit card debt. Balance transfer credit cards allow you to transfer high-interest credit card debt from one credit card to another with a lower interest rate or, in most cases, 0% intro APR for some time.
This can be a massive advantage because it enables you to pay down that existing high-interest debt at zero interest for a certain amount of time. It is essential to note how long that 0% intro APR period lasts and plan accordingly.
Determining how much each balance transfer costs according to your credit limit is also essential. Some cards allow for free transfers, like five transfers upon opening an account or a certain monthly amount. At the same time, some credit cards can charge a balance transfer fee of 3% to 5% of the amount transferred.
Balance transfer credit cards can be a great option if you have accumulated a lot of credit card debt with high interest, even after taking into account transfer fees. This card can save you a tremendous amount of money over time.
3. Business Credit Card
A business credit card allows cardholders to separate personal and business expenses. With a business credit card, you can build business credit while earning rewards points.
Just as personal credit cards, business credit cards offer many perks and rewards and have their categories of business credit cards. These categories include travel business credit cards, general rewards credit cards, cash back rewards credit cards, and even secured and unsecured credit cards.
To obtain a business credit card, you must own a business and have a business tax identification number. And just like a personal credit card, business credit cards require a credit check to be approved.
In general, you need to do as much research for a business credit card as you would need for any other credit card, and they also come with annual fees, required credit scores, rewards, benefits, and APR.
You will want to look for a business credit card that you will benefit from by making everyday purchases or starting up your business altogether.
4. Cash Back Rewards Credit Card
Cash back credit cards allow you to earn cashback after your purchases. In most cases, these cashback rewards can be redeemed as a credit to your account, gift cards, or cash in hand.
Some credit cards offer a flat rate of cash back on all purchases or specific cashback rates for each purchase category, known as bonus categories. Flat rates of cash back cards are usually 1% to 2%, while bonus cash back for specific types can range from 2% to 6%.
These cards can be great for budget-savvy individuals who will utilize bonus categories to get the most bang for their buck.
While all credit cards vary in annual fee, cash back rewards cards can range from a $0 annual fee for low cashback rates to a $95 annual fee for higher cashback rates. It is essential to note your yearly payment to decide whether it is worth it or not to apply for that specific credit card.
5. Gas Rewards Credit Card
If you have an extensive daily commute to work or are a concierge service like Uber or Lyft, a gas rewards credit card may be a good fit. This type of credit card offers excellent rewards on gas purchases, especially if made frequently.
It is important to note that some gas credit cards cap the rewards points you can earn or offer more at certain times of the year and for specific gas stations. Even so, this is a good option if you want to designate one credit card toward gas purchases solely.
For example, some credit cards will offer 3% cash back at all U.S. gas stations and 3% cashback on all transit, including taxi/rideshares, bus tickets, parking lots, tolls, and train tickets. And for some credit cards, the rewards do not stop there. They may offer bonuses for categories such as streaming service subscriptions and supermarkets.
Having a gas credit card would be highly beneficial if you are constantly at the gas station.
6. Secured Credit Card
For those who do not have a credit history or are looking to build their credit from scratch, you may be a good candidate for a secured credit card.
Secured credit cards usually require a cash deposit or collateral to secure your line of credit on that specific card. Note that if you put down a deposit and want to close out the card but have an outstanding balance, you will not necessarily get your deposit back.
For example, if you desire a credit card with no credit history and put down a deposit of $500, you are securing your line of credit that can be up to $500. This works for those who do not have a high approval chance due to their short credit history and can be a good option for those who have damaged credit and need to rebuild.
7. Student Credit Card
Student credit cards, also known as “starter credit cards,” are specifically geared toward young adults looking to start building credit. Applying for a student credit card is a good idea for a young person who does not have a solid credit history, as qualifications are less strict than other credit cards.
Most student credit cards do not carry an annual fee. They can offer special rewards, like reward points for having “good” grades and rewards for certain purchases, like in college-related categories.
If used responsibly, signing up for a student credit card can be a good way for young adults to build their credit scores and establish healthy financial habits with a small credit limit.
8. Travel Rewards Credit Card
Another popular type of credit card on the market today is the travel rewards credit card. If you love traveling or want to start, leveraging a travel card is a great credit card option.
Many travel rewards credit cards come with an annual fee ranging from $95 to $700 but can be outweighed by many travel perks. When you accrue enough miles, usually one mile per dollar spent, you can redeem them for flights, hotel stays, and car rentals.
In most cases, when you use your travel credit card to book any flights, hotel stays, or car rentals, you may earn bonus rewards points. Suppose you are a frequent flier or travel for business. In that case, specific travel credit cards offer VIP access to numerous luxury airport lounges, complimentary carry-on luggage or free checked bags, TSA pre-check clearance, and so much more.
Travel rewards cards also, unsurprisingly, tend to have low or no foreign transaction fees
Why not travel in style if you are making everyday purchases anyways?
9. Unsecured Credit Card
Unsecured credit cards are today’s most common type of credit card. Unlike secured credit cards, unsecured credit card issuers do not require collateral or a security deposit upon opening.
Unsecured credit cards can be a good option for those looking to build up their credit and already have a good credit history.
Typically, cash back rewards and travel points credit cards are types of unsecured credit cards. Most people opt for unsecured credit cards, which are best for their benefits and perks when used responsibly.
The bottom line
While there are many different credit cards, it is essential to clearly understand your personal financial goals before choosing a credit card that is right for you. You will want to find a credit card that fits your lifestyle, individual and business financial needs, and values.
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