There are almost as many different types of credit cards as there are people who use them. Determining the correct type of card for an individual's needs can be a challenge with as many options that are available. There are a few things to know about each type to determine the best credit card available for the needs of the person.
The first type of card to consider is the debit card. This card is an ATM card, used to get funds from teller machines, and a type of secured credit card. This card deducts the charges directly from the person's bank account, and the amount available is dictated by the amount of money in the checking account.
The second type of card is a secured credit card. This card comes with a limit that is already maxed out when the card arrives. The money paid back to the credit card company is in turn placed in an account, and the credit limit is available up to the amount of money that had been paid. These cards are good for people with little to no credit, as they are easier to get than a traditional card, and are in turn good to use for building a credit history, or getting good credit ratings.
The third type is the traditional credit card. These cards can be used to purchase a range of goods, and can be paid off all at once, or minimum payments at the end of the month. The cards charges interest on the outstanding balance, and do require good credit to obtain. In addition to the standard credit card, options such as airline miles and other programs can be available on cards to add value to their user. Cards can also be affiliated with organizations and groups that receive a percentage of the spending on the card by the holder every month for their causes.
Another type of credit card is the charge card. These cards do not have interest rates, or credit limits, and have to be paid in full every month. These are the cards that are usually used for business expenses, and require very good credit to receive one.
Limited use credit cards are your store and gas cards. These cards can only be used at one or two stores, and can only be used to purchase things that they sell. Department stores have their own cards, as well as gas stations and catalog companies. Credit is again necessary to qualify for these cards, although it is typically less than is needed to get a standard credit card.
The newest type of credit card on the market is the prepaid credit card. Similar to a secured credit card, money is deposited into an account, and the card can access funds up to the available amount. These cards do not require any form of credit to obtain, just the set up fees required to activate one. These cards are good for people who do not have credit but need a credit card for purchases off the internet, online or phone bill paying, or rentals that require a credit card for deposit such as hotel rooms and car rentals.
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