There are a cornucopia of credit card options out there. Figuring out if you want a card to build credit or gain paints is going to be key in picking out the right card for you.
Here is how to differentiate between the three basic kinds of credit cards.
1) Rewards
The key to rewards credit cards is that they give you something for using that card. Rewards cards are very handy if you use your card to buy everything and then cash in with the points for airline miles to go on a trip. In addition, there are cash back cards that give you some bonus money for using that card. That tidy little sum is a nice bonus to staying loyal.
Travel cards are usually available through an airline or hotel rewards program. They align a certain amount of their rewards points with the amount of points that you accumulate with your card.
According to the experts at SoFi, these types of credit cards can have some hefty fees attached to the tempting bonuses. “If you are good about paying off your card every month and never incur interest, you might consider a rewards card. They may offer sign-up bonuses and give consumers rewards in the form of miles, cash back, or loyalty points.”
Cards with coveted premium travel rewards can charge yearly fees of up to $450 dollars. You will have to figure if this fee is worth your monthly expenditures.
Cash back cards can offer different sums of money based on promotions. There could be a 1 percent cash back overall, but they could have promotion periods that could increase that amount five times.
2) Low Interest Cards
There are people who want to pay little interest to banks, but do not pay their balance in full every month. The low interest cards will appeal to them.
However, those who qualify have to start out with good credit. The reward is worth it. Some cards offer balance transfers of 0 percent for over a year, and lower interest rates for the life of the loan. >
Best of all, this card does not have include any yearly fees.
3) Credit Building Cards
This group of cards are for those who have never had a credit card or those who are trying to rebuild their credit.
For those who are new to credit cards, there are student cards. These card bypass any need for a FICO score. But, you will need to show proof that you are a currently enrolled student.
Credit card companies will often entice students with a free gift or another incentive.
Secured credit cards are another credit building card. These cards are for people who have a low credit score and need to build their credit.
Usually a credit card company requires a minimal deposit of around $200. After consistent on-time payments, that money is often refunded and the card holder is upgraded to a regular credit card.
Understanding the basic three categories of credit cards can help you choose from the endless array of cards available. These cards can help you build credit, or help you afford your dream trip. Knowing what you want will help you wheedle to your perfect card.
