One of the most confusing things about credit cards is that there are just so many of them. Each offers different features and benefits, and because they are all couched in terms to attract everyone, it’s difficult to know which cards are the best for you.
This article explores the different credit card opportunities to help you decide which (if any) will help you.
There are essentially two different kinds of credit cards – all other cards are subcategories of them. They are:
- Secured cards which require you to have a certain amount of money deposited in your bank before they can be used. (Your deposit acts as security in case you can’t repay the amount you owe on thee card.) If you have a bad credit history, this is probably the best kind of card for you. The deposit is fully refundable if you use your account wisely. You may even accumulate a little interest. Secured cards are usually easily available to people with a low credit score and, with a little discretion, can be used to help raise that score.
- Unsecured cards are issued by banks with a limit on the amount of money you can spend – a limit decided according to your credit history. (The better your credit history, the higher your limit.)
Balance transfer credit cards help you get out of debt a little more quickly.
These cards will let you transfer a high interest credit balance to a card with low interest rates. This is a useful tactic because it helps apply more of your payments to the principal balance (rather than interest charges). The terms and conditions depend on the lender that is issuing the card. There also tends to be a balance fee of 3% to 5%. So make sure you read those terms and conditions very, very carefully. Check out curated “Balance transfer credit cards” offers below:
0% APR credit cards protect you from interest – for a period.
The APR or annual percentage rate is the interest rate applied to whatever you buy with your credit card if you carry a balance on it. Even though credit cards often use a 0% intro APR to hook customers, that rate doesn’t necessarily apply to both balance transfers and purchases – but usually one of the two. This type of card means you don’t have to pay any interest for a specific time period (usually six months to a year). But lenders love adding hidden costs and added costs so read the terms and conditions carefully, and explore different market rates, before making a decision. We’ve rounded up the best “0% APR credit cards” offers below:
Low interest credit cards help you make a big buy.
Low interest credit cards usually offer two kinds of APR: a low-introductory one that jumps to a higher rate later on or a single low fixed-rate APR. These cards offer some useful opportunities – especially if you need to make a big purchase. They let you repay your loan over several months (sometimes up to a year) with little or no interest. But make sure you read the terms and conditions thoroughly so hidden costs like fees or accumulated interest won’t be a pain later on. Check out curated “Low interest credit cards” offers below:
Business credit cards help you – you guessed it! – open a business.
These cards are not targeted towards consumers and help establish business credit file – although, be warned, many of them require you to personally guarantee the debt. They’re designed to help you earn rewards and establish a credit history, keep business expenses separate from personal expenses, provide expense management reports, cards for employees and higher credit limits. But if you’re thinking of getting one just for the balance, don’t. The interest rate is designed for business, not people and it might just make you cry. We’ve rounded up the best “Business credit cards” offers below:
Travel rewards credit cards are (unsurprisingly) designed for travelers.
These cards help you save money on travel-related purchases. Although they tend to have an annual fee, they also offer programs that help you get enough miles or points for flights and hotel stays.That’s why you need to be traveling enough to use those points – otherwise you will simply have to pay the fee without getting the perk.Check out curated “Travel rewards credit cards” offers below:
Limited Purpose Cards are meant to be used at specific locations.
Think of a store credit card. It works just like a standard card, with minimum payment and finance charge, but it can only be used in specific locations – usually, the store or chain of stores that issued it. Gas credit cards also fall under this category – as do any cards, really, that can only be used in specific places or for specific purchases, pre-determined by the lender.
The bottom line is this: if it works for you, it may not work for your neighbour.
You need to choose your card based on your requirements. Assess your goals and lifestyle. Consult a trusted adviser. And research, research, research.