Credit Cards – All you Need to Know on Credit Cards
How to Use Credit Cards All you Need to Know on Credit Cards
Credit card entails a payment card given to users to help the cardholder to pay for goods and services based on the cardholder’s guarantee to the card issuer to pay for the amounts and also other agreed charges.
Here, the bank generate a revolving account and grants a line of credit to the cardholder, which the cardholder can borrow money for payment to a merchant or as a cash advance.
Note: A credit card and charge card are not the same it requires the balance to be repaid in full each month. Credit card differs from a charge card also in that a credit card typically involves a third-party entity that pays the seller and is reimbursed by the buyer, whereas a charge card simply defers payment by the buyer until a later date.
Numerous credit cards spread across dozens of credit card issuers. For you to get the very type of credit card you desire. We have here the types of credit card you could choose from depending on your choice.
Balance Transfer Credit Cards
Balance transfer credit card is one that gives low introductory rate on balance transfers for a some period of time.
If you want to save money on a high-interest rate balance on an existing card, a balance transfer is a good way to go.
Note: Balance transfer interest rates vary some are as low as 0 percent, but these usually have qualifiers such as a minimum of two transactions a month.
The lower the promotional rate (and longer the promotional period) the more attractive the card is. However, you’ll often need good credit to qualify.
Rewards Credit Cards
Just as the name indicates, rewards cards are those that offer rewards on credit card purchases.
There are three basic types of rewards cards: cashback, points, and travel. Some people prefer the flexibility of cashback rewards, while others like points that can be redeemed for cash or other merchandise.
Travel rewards cards remain a favorite among frequent travelers because of the ability to earn free flights, hotel stays, and other travel perks.
This credit card require the cardholder to load money onto the card before the card can be used. Purchases are withdrawn from the card’s balance. The spending limit does not renew until more money is loaded onto the card.
Prepaid cards do not have finance charges or minimum payments because the balance is withdrawn from the deposit you’ve made.
These cards are not actually credit cards, and they don’t directly help you rebuild your credit score.
Prepaid cards are similar to debit cards, but are not tied to a checking account. A lot of people use them as a way to stay within budget.
Types of Credit Card – Student Credit Cards
Student credit cards are those specifically designed for college students with the understanding that these young adults often have little or no credit history.
A first-time credit card applicant would generally have an easier time getting approved for a student credit card than another type of credit card.
Student credit cards may come with additional perks like rewards or a low-interest rate on balance transfers, but these aren’t the most important features for students looking for their first credit card. Students generally have to be enrolled at an accredited four-year university to be approved for a student credit card.
Standard “Plain-Vanilla” Credit Cards
Standard credit cards also known as “plain-vanilla” offers no frills or rewards, relatively easy to understand they are not difficult to use.
The standard credit card allows you to have a revolving balance up to a certain credit limit.
Credit is used up when you make a purchase and then more credit is made available once you’ve made a payment. A finance charge is applied to outstanding balances at the end of each month.
This Credit cards have a minimum payment that must be paid by a certain due date to avoid late-payment consequence.
Credit Cards – Charge Cards
Charge cards dont have preset spending limit and balances must be paid in full at the end of each month.
Charge cards typically do not have a finance charge or minimum payment because the balance needs to be paid in full.
Late payments are subject to a fee, charge restrictions, or card cancellation depending on your card agreement.
How to Use Credit Cards – Secured Credit Cards
This are for people don’t have a credit history or who have damaged their credit status. Secured cards require a security deposit to be placed on the card.
The credit limit on a secured credit card is typically equal to the amount of the deposit made on the card, but it could be more in some cases—such as a major default such as defaulting on a mortgage payment. It’s worth noting that you’re still expected to make monthly payments on your secured credit card balance.
Types of Credit Card – Subprime
These credit cards are geared toward applicants who have a bad credit history and these cards typically have high-interest rates and fees. While approval is often quick, even for those with bad credit, the terms are often confusing.
The Federal government has made rules regarding the amount of fees subprime credit card issuers can charge, but the card issuers often look for loopholes and ways to skirt these rules.
Notwithstanding, the unattractive of subprime credit cards, some consumers continue to apply for the cards because they cannot get credit any where.
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