Understand the Features of Different Types of Credit Cards

Credit card business is amongst the most lucrative for financial institutions. Therefore, companies which offer the service have come out with various types of cards and claim theirs to be one of the best in the market. Understand the features and benefits of different types of credit card can help you to select the most appropriate ones for you.

• Standard Credit Card. This is the most common of all types. You do not have to make any deposit before owning it. It is normally assigned with a credit limit predetermined by the card company. You are suppose to utilize it within the limit. And pay back either in minimum payment or in full within the grace period to avoid late charges. Any balance amount would be subject to a financial charge.

• Business Credit Card. It is specially designed to fit the needs of business world. Its main feature is, it separates business expenses from personal expenses. On top of getting the ordinary rewards, card holders are entitled to special business rewards. Credit limits are usually higher to cater the extensive use of the cards. It can also be extended to the employees of the company.

• Student Credit Card. The target market of for this type is on those undergraduates in tertiary institutions like colleges and universities. This group of people is basically without a consistent flow of income and with no credit history. They may not be eligible to the standard type. This card generally carry lesser features and benefits.

• Secured Credit Card. If you do not have a good credit history, do not worry. You still eligible to own a credit card. Secure credit card is the one designed for people who do not have credit history or with bad credits. The card holder need to make a security deposit to the card. The credit limit is equal to the amount of the deposit made. Alternatively, card holders may also choose to place the collateral with the card company to apply for it. Collateral can be in many forms including jewels, cars, expensive watches, collectibles etc.

• Prepaid Credit Card. It needs to be loaded with credits before you can use it. Hence, there is no finance charge and minimum monthly payment incurred. No debt will be accumulated. It is good for budget control. Although no finance charge, prepaid card users are normally charged with monthly fees, application fees, reload fees etc.

• Cash Back Credit Card. You can expect cash back from your purchase for using it. The cash back rate is usually about 1% of the purchase amount. Depend on your card, some may offer higher cash back rates for purchase from selected merchants. It is among the best types of credit card offered in the market. If manage it wisely, you can save a significant amount of money over time.

• Charge Card. It does not have monthly minimum payment amount as card holders are expected to pay back in full monthly. If the due amount is not fully settled, the penalties are normally very high. This card type is not very popular though.

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