If you're new to the world of credit cards, it can seem like an overwhelming undertaking. Where do you begin?
Whether you’re looking to improve your credit, get cash-back, get travel points, hotel credit or anything else, there’s probably a credit card for it. Read our guide to the universe of readily available credit cards.
Popular Credit Card Categories :
The most popular types of credit cards fall into the following categories:
0% or Low-interest
Whatever your need is, WalletGeek can help find a credit card for you. However, the above credit card types all have different functions and application rules. This short guide will explore each credit card type in more detail and tell you everything you need to know before you fill in your application.
You’ve most likely seen several credit card providers advertise their low or 0% interest card options. These offer cardholders 0% interest on purchases over a certain time, which is ideal for those with bigger expenses. It’s important to note that while low-interest cards aren’t usually offering 0%, their interest is still far lower than cards which are designed for fixing bad credit.
Credit cards with a reward scheme offer the customer a chance to get some sort of a “compensation” for their spending. This usually includes things like points, travel miles, or even cash. The most common types of reward cards include:
Hotel credit cards offer specific rewards, some of which can include complimentary upgrades, free nights, exclusive deals, and plenty of more benefits. The credit cards tend to offer deals tied to a specific hotel company, however, this usually includes many well-known brands, allowing you to save plenty of money during your stay. As the interest rates for these types of credit cards may be high, it’s important to remember to pay off your debt each month.
Cash-back credit cards offer you a chance to get some of the money back when you shop at selected stores. The money can be used to pay your monthly balance, however, some credit cards even offer cash-back money transfer options to be deposited into your bank account.
If you’re a frequent traveler, an airline reward credit card can help you earn miles points, which you can then redeem as free upgrades or free flights. The cards also tend to offer plenty of other perks, many of which include the exclusive airport lounge access and priority boarding. It’s important to note that airline reward credit cards can usually only be used on specific airlines.
This is the option for those that don’t want to be tied to a specific airline, but want a variety of travel perks to choose from. The cards are flexible and offer rewards on plenty of expenses, as well as hotels, airlines, and much more. These types of credit cards are often extremely useful for those that frequently travel abroad as they don’t charge any transaction fees.
Balance Transfer Cards
With balance transfer credit cards, you’re able to move your money to a new card, without increasing interest for paying off your new debt. These credit card options offer 0% or low interest and are a great way of paying off cards with a high interest rate. It’s important to note that you may have to pay a transfer fee, however, you will still be able to save plenty of money.
Small Business Cards
If you’re a small business owner and want to invest in your employees, you may consider giving them a limited line of credit. The company will be able to easily manage cash flow and avoid any interest when the debt is paid in full. Having a business credit card will also allow you to build up your company’s credit score, which is independent from your personal score. This may pay off in the long run when you are looking to move to a new office or level up your business by offering company cars.
Cards for College Students
Being a college student means extra expenses on pretty much anything regarding your studies. But as a student, you’re able to use a credit card and start building a good credit score early. Although you may start out with a lower credit limit and a higher interest rate, it’s a perfect way to take a first step into the credit score world. Many student credit cards are tied to a specific bank. In order for your application to be considered, you may have to get a regular account at that bank first. As always, it’s important to know that you shouldn’t spend more than you can afford as the APR with said credit cards can be significantly higher than any other credit card type.
Cards for Bad Credit
If you have bad credit or want to rebuild it after taking a financial hit, you can do so with credit cards that offer slightly higher interest rates but are designed for those that don’t have other credit options. Credit cards for building credit are typically split into three types:
Secured credit cards
Secured credit cards offer a refundable security deposit scheme, which equals the credit limit. By doing so, people with a smaller credit history are able to increase their credit score and ensure to the issuer they are able to afford the monthly bills. It’s important to mention that secured credit cards are only accessible to those that don’t have a damaged credit.
Credit cards for fair credit
Credit cards for fair credit offer a chance to those that have a credit score ranging between 630-689. Although you may not be able to get the best-possible rates, credit cards for fair credit allow you to improve your score with slightly higher interest rates.
Credit cards for bad credit
Those with a credit score lower than 630 can use credit cards intended for bad credit. You can find several card providers that offer higher interest rates to their customers and allow them to build their credit as long as they pay off their monthly statements every time. You can also get secured cards, which offer a cash deposit scheme which gets refunded after you upgrade.