Credit Card Types and Features — Part 2
These days there are a range os credit cards for a range of different consumers. If you are considering obtaining a credit card then you need to know the type of card that's best for you. The type of card you should consider will depend on your individual circumstances and the purpose for which you require the card. I'll review some of the main types below:
Business Credit Cards
These cards are intended for use by various types of busiensesses. For small businesses they allow business and private expenditure to be kept separate, which can aid with accounting. For larger businesses these cards are often supplied to travellers within the company who need the cards for business expenses. These cards generally carry a much larger credit limit than individual, private cards. For larger companies they may offer substantial cashback opportunities. Even for smaller companies these Corporate cards (as they are sometimes known) may offer an expense management service that will allow you to keep track of the outgoing money. The cards may also special business rewards and saving opportunities that go above and beyond what the individual card owner may have.
Cash-back Credit cards
This type of card is a relatively recent arrival in the marketplace. These cards generally offer reimbursement of a percentage of each purchase made (which can be as high as 1%). This type of card was pioneered by Sears which still offers discounts on purchases made in their stores. A popular variant of this cards allows the user to accumulate points on purchases or transactions from a number of vendors which can be used against purchases in a supermarket or store. Because of the incentives offered this type of card may well be worth investigating further if you're considering a credit card.
Credit Cards for Bad Credit
Despite what most people think, it is still possible to gain a credit card even if you have bad credit. However, these cards will come with a number of restrictions attached to them; restrictions not normally associated with normal credit cards. In addition, the credit limit will be much lower and the interest rate levied will be far higher. You may even have to take out a secured card which means that the loans taken out on the credit card need to be secured against a savings, deposited shares, a house or some other form of equity. Normally, once you have established that you will be responsible many of the restrictions imposed on these types of card will be lifted.
Gold and Platinum Credit Cards
Depending on your income and your credit history you may be eligable for a credit card with more incentives or lower interest rates than standard cards. These cards, usually branded as Gold or Platinum cards generally offer higher credit limits and lower interest rates than standard cards. Sometimes a company may offer to upgrade your cards to one of these if you have been with them for any length of time. If you are eligible for one of these cards then they are definately worth pursuing.
Loan Credit Cards
Though it could be argued that every credit card transaction is, in fact, a loan this relatively new type credit card is a proper loan. A loan is secured through a bank or other financial institution. You are then supplied with a cretit card whit its limit set to the ammound of the loan you've just secured. You can use your card to borrow up to the limit of the loan. The advantage is that the intrest charged is the loan interest rate rather than a credit card interest rate as a result this type of card can be 10% cheaper in terms of borrowing than a regular credit card.
Prepaid Debit Card
Though not strictly a credit card, this type of card is becoming more popular and is included in this list as it can be obtained form a third party which is not your regular checking bank (unlike a debit card). These cards are issued by the main card issuers and can be used in various retail outlets like any normal credit card. However, with prepaid credit cards you have actually deposited money in an account. Your credit limit is set by the amount of money in this account. As a result you can never spend more than you actually have in this deposit account. This is an excellent card if you want the convenience of credit card purchases (or want a card purely for emergencies) whilst allowig you to maintain a tight control of your finances.
Student Credit Cards
Many issuers now supply credit cards targeted specifically as students. These cards typically have lower credit limits and offer fewer incentives than other cards. These cards are intended to get students into the habit of using credit cards and this is one of the reasons that the majority of students end-up with credit card debt of between $1500 and $7000 by the end of their studies. With the high interest rates charged on these cards this can be a crippling debt that's hard to pay off.