Save Money by Understanding Credit Card Types

Everyone wants to save money wherever they can, but this is a top priority for most people using credit cards. One of the easiest ways to do this is by understanding the different credit card types and the benefits of each one.

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Standard Cards

These are by far the most common credit card types. They usually allow the consumer to keep a balance up to a particular limit and require monthly minimum payments. Typically they don’t have to be paid in full at the end of each billing period and are therefore often called revolving credit. When the credit limit is reached no further purchases can be made until payments bring the balance back under the limit.

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Premium Cards
This type of credit card offers incentives and benefits beyond just being able to charge up to the limit of the card. Typical premium cards include Gold and Platinum cards as well as those that offer reward points, cash back, travel upgrades and mileage and other rewards. These kinds of cards almost always have higher fees and also have stricter income and credit score requirements. Usually, the balance does not have to be paid off each month but minimum payments are required to keep the card in good standing.

Charge Cards
Charge cards are a special type of credit card that have to be paid off at the end of the billing period. They generally do not have a credit limit and often do not have a finance charge. They also typically don’t require a minimum payment since the balance must be paid at the end of the billing cycle. These kinds of cards have stiff penalties for late payments including fees, charge restrictions, and sometimes card cancellation.

Secured Credit Cards
Secured cards are available for those who have no credit history or who are trying to re-establish credit after a blemish. The consumer places a security deposit with the issuing bank and the credit limit is based on the amount of the deposit; however, it can increase above the amount of the security deposit with responsible payments and card usage. Nearly everyone can get a secured credit card but the interest rates can be quite high despite the fact that the consumer has a deposit with the issuing bank. These cards require monthly payments.

Limited Purpose Cards
These cards are designed for specific purposes and generally include retail cards and gas company cards. The cards can only be used at the retail establishment and they are sometimes easier to get for those with no credit history or those with some negative credit background. These are usually a good option for young people just starting out and students looking to develop their credit background. The payments and interest vary significantly depending on the issuing bank.

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