Types of Credit Cards: Which One is Right For You?
There are many different types of credit cards out there. Which one should you choose? You never want to leave money on the table, and it’s easy to be swayed by the idea of airline points, cash back, or a free balance transfer. Take the time to understand the fine print and pick the one that’s best for what you need.
Travel and Airline Credit Cards
These are ideal for consumers who travel frequently. Narrow down the ones you’re looking at to the airlines you like to fly and where they travel, and then compare how points are earned, how many you need for a ticket, interest rates, and annual fees.
0% APR Credit Cards
If you’re in a situation where you need to make a large charge that you can’t pay off right away, a 0% APR credit card might be a good solution for you. These types of cards save money in finance charges because they offer zero percent interest for an introductory period.
Cash-Back Credit Cards
With cash-back credit cards, you earn a percentage of what you spend back in cash. This in effect gives you a discount on whatever you purchase using this card.
Balance Transfer Credit Cards
If you have a large amount of credit card debt, a balance transfer card could be attractive because it allows you to consolidate all your credit debt onto one card with a lower rate. Be very careful to read the fine print regarding fees and when the interest rate will go up.
Rewards Credit Cards
Rewards cards broaden the benefits you receive beyond just airline miles to include cash rebates, gift cards, and luxury items, depending on the card you choose. They often offer 0% APR for a period, but then it jumps to a higher interest rate, so beware of carrying a balance.
Business Credit Cards
Small business credit card options offer specific benefits like additional credit levels, expense tracking, and rewards for everyday items. They are invaluable for separating business expenses from personal expenses and are tailored to the needs of a business owner.
Low-Interest Credit Cards
Low-interest credit cards provide exactly that - low interest rates - so you can pay less in interest as you pay down your principal balance more quickly.
No Annual Fee Credit Cards
Some credit cards charge large annual fees, and while those come with some additional benefits, you can still opt for a no annual fee card that has a rewards program.
Credit Cards for Other Situations
Sometimes people are in unique situations, such as students and people with poor or non-existent credit. Credit card options include secured cards and prepaid cards that are designed to build strong credit.