Learn of the different types of credit cards used today by shoppers all over the world and of their pros and cons of using them.
The Different Types of Credit Cards
This is a card that is issued by a bank or a financial institution giving the customer the opportunity to borrow money. The card can be used to buy return tickets to Italy or buying pizzas. Usually, people use these cards at points of sale.
If the card holder pays back the borrowed amount within the grace period then he does not have to pay anything. However, if he is unable to pay within the given period then he has to pay some extra money as interest in addition to the borrowed amount. Learn of the pros and cons and different credit cards below. Read here of some of the best cards that banks offer to their customers as follows:
Online credit cards
Learn what is online credit card – it is a quick way to borrow money and it is secure and offers good consumer protection.
Prepaid credit cards
Learn about prepaid credit cards and how these are hybrid, alternative to banks and are available to persons with bad or poor credit.
Secured credit cards
Learn the secured credit cards definition and the features of this type of card that will be of importance to the bank and the user.
Unsecured credit cards
Learn unsecured credit cards definition and how their operation affect both the issuing company and the customers using them.
Virtual credit cards
Learn the virtual credit card definition and how it works for the customer as compared to the plastic cards issued by banks today.
Other Credit Cards:
Credit cards for bad credit
These are credit cards for holders whose credit history is not good at all. A credit history can be categorized as bad if the debt payment is very poor as indicated by the huge amount of debt and the existence of unpaid debts or borrowed loan whose repayment period is already due but the loan is not fully settled. This is a credit card offered to a holder whose credit history is not good at all.
Credit cards for fair credit
Consumers with a fair credit still have options for their cards but then these options are limited as a result of the type of history they have. These cards come with an annual fee and a lower credit limits hence the holder is limited to a specific amount of money to spend and there is no emergency offers in case of an over purchase. The only advantage of this type of credit cards over the credit cards for bad credit is that the holder is given a second chance to improve on their credit status in future.
Credit cards for no credit
There are several types of credit cards based on the following groups of credit conditions, and one of them is no credit. These are the types of credit cards issued to people who do not have a credit history for example, a first time account holder. Under this category, the card issuer will base the issuance on the current financial status of the account holder. Here, the issuer and the holder are under obligation on the condition of the account after the issuance of the card.
Credit cards for poor credit
Unlike the credit cards with bad credits, these types of cards are the types of credit cards issued to people with a poor credit history. Here, the card has limited options but which are subject to change upon the improvement of the credit status of the card holder over time. If you are in this category of credit condition, then a credit card with poor credit is the best option for you and in order to enable you get a better access to a better credit card, it is good to adhere to the terms and conditions of the card and account issuer.
Pros and Cons of Different Credit Cards
1. One can make large purchase now and pay off in smaller amounts.
2. The budgeting process becomes easier as provider sends regular statements.
3. It is easier to carry than take along a bundle of cash when out shopping.
4. If the card holder regularly pays off his dues then he gets good credit score which will be helpful in the future.
1. If the person is not careful about spending then he can get in debt
2. Usually, people overspend when they are using a credit card as it is easy.
3. If a person fails to pay off the borrowed amount on time then interest is charged. If he still fails to pay the borrowed amount along with the interest then over time it will pile up. As a result of that, small debts seem larger over time.
There are different banks and financial institutions offering credit cards. It is important to get the one that offers maximum benefits. One should ensure that there are no hidden charges involved with the usage of these cards. You should also seek to pay off the borrowed amount on time to avoid paying interests. It is important to note that withdrawing cash from the credit card will make the person liable to pay higher amount of interest. Amazon has some great books from which you can learn more.
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