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. Some of these cards are discover, visa, American express, and Mastercard. These cards can be used to pay for goods and services in store or online. People can also get cash advances from them at their banks or at ATMs. Credit cards are good to have while travelling to different countries. Some of them are travel rewards credit cards.
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:
1. Student credit cards
Read about student credit cards offered by issuers with various benefits including lower limits, rewards, protection and tools for the users.
2. 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.
3. Unsecured credit cards
Learn unsecured credit cards definition and how their operation affect both the issuing company and the customers using them.
4. 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:
1. Online Credit Cards
An online credit card, just like an online debit card is a card offered by a certain bank but whose details are sent to you online. The only difference between an online credit card and the plastic credit card is the time it takes to expire. An online credit card takes between 24 and 48 hours to expire while the plastic credit card takes much longer tie to expire usually up to years. In order to get a credit card, one is under obligation to login to the bank’s website and request for the card. All the details of the card are made available for you via online means and from here; you can b in a position to make a purchase within the specified time. The following is a list of advantages of using online credit cards:
- It is a quick way to borrow: Like the plastic credit card, using online credit card is an assurance and a quick way to borrowing money. Yes it is a quick way in the sense that, you will be in a position to get goods worth a way too much amount of money which in the real sense, you do not have at that given time. You can decide to buy goods using credit card and distribute the repayment over a given period of time as with a loan. This is provided it is within the allowed time and that you are not straining while paying it.
- Goof Consumer protection: As a consumer, you are assured of protection if you pay with an online credit card. This is because, if something goes wrong in the process of transaction, you will be in a position to gain back all your money unlike cash payment methods where money handling is susceptible to dishonesty.
- It is secure: Since the time it will take before an online credit card will take before it expires is very short, it reduces the odds of it being hacked or even used by unauthorized persons. If you want to make payments without the risk of exposing your account to malicious parties, then online credit card use is the way to go.
2. Prepaid Credit Cards
Well, prepaid credit cards are cards that let one load cash on them and spend anywhere debit or credit cards are accepted. These cards are good to get if one is usually rejected for credit or given to teens to help teach them on responsible spending of money. The following therefore, is a list of things you need to know about prepaid credit cards:
- Prepaid cards are a hybrid: What looks and act like a credit card is not always a credit card since although it is often called a prepaid card, and probably looks like one, prepaid credit card works more like a debit card than a credit card. To use it, one choose the amount of money to put on the card and as they spend, their purchases are deducted from the total balance. When the amount of money gets low, it can always be added at the bearer’s wish.
- They are an alternative to banks: For over eighty million people living in the United States who does not prefer using the banks, a prepaid credit card makes it possible for them to enjoy life as if they were using the banks. Without the need of linking you to a bank, prepaid credit card allows one to do things that would otherwise require bank details like renting a car or booking a hotel room. They even come with account routing numbers so that one can have their paycheck directly paid to the bank without physically appearing at the banking halls.
- They are available to those with poor or no credit: In situations where your credit history is either none existent or thin and that a normal credit card issuer is not in a position to issue a normal credit card, then prepaid credit card will be of great benefit since there is generally no credit history to follow while giving out prepaid credit cards. This is because one can not spend beyond the loaded amount of money in the card therefore, there will not be any issue affecting it at all.
3. Business Credit Cards
Applying for one is just the same even as if it were a personal or any other type of credit card. These types of credit cards are good for earning rewards and other great packages like cash backs and travel points. These packages only to business oriented transactions for example, an office supply store and all other stuff related to it. The following are some of the ways in which these credit cards are different:
- Issuers can instantly raise rates: Consumer credit cards have a protection by the governments but not business cards. In other types of credit cards whether secured or unsecured credit cards any changes in rates are broadcast by the issuer forty five days earlier in order to give the customers enough time to internalize the changes while in business credit card the card issuer can decide to hike the rates instantly.
- Less time to pay one’s bills: In other types of credit cards, it normally takes up to twenty one days to make a deal but with business credit cards, the transaction is very fast and whoever is in need of the services will get them within the shortest time possible.
- No limits on late fees: With the use of these credit cards, there are no limits on late fees hence, once you are late to pay your dues, and you are not limited to a specific period of me in order to complete the transactions or repayment of the due balance.
- Issuers ask about your business: As the name suggests, since this is a business credit card in question here, you should always be asked about your business. This is a standard procedure followed for issuance of a business credit card unlike the other types of credit cards where there is no need of such questions about the details of what and how the card will be used.
Various Ratings for Credit Cards
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.
1. 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.
2. 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.
3. Credit cards for poor credit
Unlike the credit cards with bad credits, these card types are 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. Learn also about the Pros and Cons of credit cards, as follows:
Pros and Cons of Different Credit Cards
- One can make large purchase now and pay off in smaller amounts.
- The budgeting process becomes easier as provider sends regular statements.
- It is easier to carry than take along a bundle of cash when out shopping.
- If the card holder regularly pays off his dues then he gets good credit score which will be helpful in the future.
- If the person is not careful about spending then he can get in debt.
- Usually, people overspend when they are using a credit card as it is easy.
- 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.