Credit cards are used all around the globe. Not the same type of credit cards is used by everyone. Each one has their own preference so they opt for different credit cards as per the need and credit score. So, if you are going to opt for a new credit card, then you will have to know about the type of credit cards that are available.
Credit cards can be generally categorised as secured and non-secured cards.
Secured Credit Cards:
This does not mean that these provide security for you; instead, it means that a certain amount is secured by the bank to provide you the credit card. This type of card requires the customer to deposit a certain amount to start using the card. If you have a poor credit history or if you have damaged your previous credit then you can go for this option.
The credit limit of this card would be certain percentage of the deposited amount or the deposited amount itself. The amount deposited by the customer is held by the bank as a precautionary measure that they will use the deposited amount if you are unable to repay your debt.
You can also get a secured card with conversion option. By this it means that you can convert your card to standard credit card after using it for several months and proving a good payment history.
Unsecured cards: Most of the credit card that is under use falls into this category. On the contrary to the secured cards, this type of cards does not need a deposit to be made initially. In this case, the bank believes that you will repay the debt amount just by viewing your credit history. The credit limit is provided based on your credit history.
So, have you decided whether you have to go for the secured or the unsecured option? Now, it is the time for you decide which type of credit card you must choose.
The type of card can be divided based on the different features and facility that comes with it and based on who uses it. So, know about the various facilities that are provided by the bank for each card and then opt for the best one that suits you well.
Based On Features:
Standard Credit Card:
These are cards with no offers, no rewards, and no deposits. The credit limit is set by the issuer. One can purchase up to the allotted credit limit and it will be available to the card holder again when the amount is paid. This type of card usually has a zero or low-interest rate.
Balance transfer Card: These cards are used to pay off the debts or balances on other card. The transfer can be to a store credit card, gas card and similar cards.
These are good for people who pay off the debt amount each month. Variety of rewards is given to such people and the reward varies from bank to bank. It can be in the form of points, discounts or cash back. Generally, the issuer will have to tie up with airlines, hotels, and stores that provide the offer based on the usage. Though there are rewards for this category, there are various terms and conditions that have to be satisfied to enjoy the facility.
This type of card does not have any credit limits instead the card holder has to load a certain amount to use the card. However, it must not be confused with the secured card which is used only in the case of poor credit history. The amount will be deducted from the card balance. The limit is not renewed unless the card holder loads money again. Though they called credit cards, they are more similar to the debit card.
Note that these are only few of many featured cards that are in use.
Based On Use:
These are especially for business owners who deal with the business and personal transaction separately. The company can issue it to their employees to use it for the business with no additional charges. This helps the business owner to track his business wisely.
These are especially for studying youngsters who will not have any credit history. This type of card comes with various rewards and discount options.
These are normal cards that are dealt by common person for their personal expenses.
There are lots of options in choosing credit cards. So, think twice and purchase the one that suits you well.