Credit Card 101 for Beginners: Types of Credit Cards

By Leni Parrish on September 21, 2010

Even If you are new to credit cards, by now you should know that these plastics charge customers interest and the charges made in establishments accumulate. This is just the very basics of credit cards. But do you know that there are a lot of types of credit card? Of course, if you want to get a credit card now, and you have never applied for one before, there are certain things you may have to come across before finally going to have one.

Maybe you know that there are several types of credit cards in America. When credit card companies ask you what type of card you want to open up, don’t be lost for words. You can just choose to have a standard credit card. Well, this is the basic credit card with simple features. You will have a revolving balance for this one up to a certain credit limit. Once you pay up the credit amount along with the finance charges, you are allowed to use the credit card again. Premium credit cards are some levels up higher than the standard one. Premium offer more than the benefits of the standard. However, it is a little more difficult to get one because of the qualifications.

Charge cards don’t have credit limits. But the balances must be always paid in full at end terms. Charge cards don’t have finance charges or minimum payments because the amount should be paid in full. The only other fees involved are late payment fees.

Limited purpose cards are obviously cards with only specific uses. These cards can only be swiped in establishments but only those specified by the credit card companies. Example of this is the gas credit card.

Now if you are a small business, it will be better for you, as the owner, to obtain a business credit card. This card is basically for business purpose. It works the same with the standard personal types only in this one, the business is the cardholder. It makes tracking business expenses easier and would keep your business and personal transactions separate.

Then, there’s prepaid credit cards. These aren’t actually “credit” cards. These are reloadable cards that work similar to a debit card except that you don’t have to have a bank account to be tied with it. When you make purchases, the money is simply withdrawn from the balance in the card. There are no interest charges for this one, so it is a good deal for people who do not want to have plastics.

Finally, now that you know the other types, it is important for you to know that it is not easy to obtain a credit card especially when you have never had one before. But with the last type, the secured credit cards, you can be easily approved with your application. Here, you are required to provide a deposit which will be used for the defaulted payment in the secured.

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