“Do you take AMEX?” You’ve probably heard this question asked plenty of times before. Whether it be waiting in line at the coffee shop, filling up at the gas station, or sitting down at a fancy restaurant with your dinner date. The different types of credit cards, such as the American Express mentioned above, are a great way to build up and boost an individual’s credit score. Be in charge of spending and redeem some pretty cool rewards like discounts or cashback on selected merchants.
The Basics For Credit Cards
Do You Really Need Different Credit Cards?
Additionally, credit cards are a milestone for most young adults as they transition into working professionals with jobs and a steady salary. Maybe you are a stranger to the world of credit cards, and you don’t know how you get to buy stuff without actually having to pay for them upfront. So there is a fair chance you didn’t know that there are different types of credit cards. And they all offer you various possibilities.
What Card Should You Choose?
But here’s the catch. Just like the old uncle Ben said to Peter Parker in Spiderman. “With great power comes great responsibility.” Credit cards are a powerful thing. And if you use them correctly, they can help you make some pretty life-changing decisions. But when placed in the wrong hands, it can be hazardous and may result in a mountain of debt. And sometimes it will take years to recover. That is why identifying the different types of credit cards is always a good idea. That means that you’ll be able to choose the perfect one to suit your needs.
Different Types Of Credit Cards
Here are some of the most common types of credit cards you’ll be able to find in the United States, along with their rewards programs and other essential information that you may find helpful.
1. Rewards Credit Cards
Most credit card owners keep a close eye on the rewards they can redeem through accumulated spending. These rewards can be anything from special offers, discounts, gift cards, or even travel miles, and the list is endless. To unlock these rewards quicker, people use their cards whenever they can.
However, it is essential to note that such cards come with high-interest rates and annual fees. Therefore, you should always keep track of spending on such cards and remember to pay off your balance in full when they are due every month, or you’ll end up with more arrears than rewards!
2. Credit Cards For Traveling
The Travel Credit Card is also another form of rewards card, but more specialized and geared towards frequent flyers and world travelers. Basically, with every dollar spent on this card, you’ll earn points from selected carriers, which you can accumulate and use to redeem flights.
Some of the attractive rewards that travel credit cards offer are VIP airport lounge access, 5-star hotel discounts and offers, and room or flight upgrades so that you can travel in style. These cards also include no foreign transaction fees, which is an excellent way to save money abroad. And most cards also offer a big points bonus when you sign up, which is like finding free money on the sidewalk!
If you’re always dreaming of the next time you’re jetting off to a faraway destination, then this might be the card for you.
3. Credit Cards For Fuel
Car owners and daily drivers swear by these cards, and for a good reason, too. These credit cards are among the most popular because of how simple they work. Fill up your car, pay with the menu, and collect points that you can use to redeem rewards.
There are two main types of cards in this category. The first option is General fuel credit cards, which you can use for various participating brands across the country. Or brand-specific fuel credit cards offer points only when you fill up at the brand’s gas stations.
There are so many choices on the market with various rewards and perks, so it is worth reviewing all of the benefits they offer before you start applying. And for starters, we don’t recommend using a card with attractive benefits, but you’ll have to drive 20 miles to get to the nearest participating gas station. It won’t make financial sense!
4. Credit Cards For Retail
Are you in love with shopping? Retail credit cards are an excellent way for you to collect points and redeem rewards just by making purchases from specific retailers. Some of the most common retail credit cards are offerings from department stores where they stock various items to suit every need.
The interest rates on these cards are known to be higher than usual, so always keep a close eye on your spending and pay off your balances at the end of the month promptly to avoid hefty interest charges.
5. Cashback Cards
Don’t you wish you could get money back for buying stuff? Well, with cashback cards, that’s what happens. You usually get about 1% of your total purchase amount back as cash at the end of the billing period (or even higher, depending on different card brands).
This method is a great way to earn some rebates on all your everyday spending. But only if you manage your cash outgoings well and don’t overspend!
6. Credit Cards For Business
Entrepreneurs and side hustlers, this one is for you. Business credit cards often offer exclusive perks such as savings and rewards, detailed expenses reports, and even the option to have additional business expense cards for your employees. In most cases, the credit limit ceiling is higher than regular credit cards. These amendments are always helpful if the business needs a little fiscal injection during crucial periods.
The Bottom Line
Hopefully, after reading the list above, you’ve come away with a better understanding of the different credit card types. And you learned how they work. It’s easy to get carried away with all the choices available to you, but remember that credit cards can, and often will, result in painful overspending if you’re not careful.
It’s a good idea at this stage to always keep a clear head, rather than make it worse. Look for the ones that will help you improve your financial situation. By being financially savvy this way, you’ll get to unlock some of the best things in life. As they say, the best things in life are for free! What could be better?
