Monthly Archives: November 2014

The Different Types of Credit Cards

Using credit cards is a convenient way to purchase virtually anything under the sun, from clothes to a holiday vacation. But keep in mind that a credit card isn’t the same as a debit card. If you are using a credit card, it means you’re borrowing money. But if it’s used unwisely, you can acquire a bad debt. So to help you know which type of credit card will best suit your lifestyle and needs, learn more about the different types of credit cards:

1. Zero or Low Interest Rate Credit Cards: This is best for individuals who are willing and are able to pay credit card debt quickly. Most card issuers offer low interest rates on balance transfers from other credit cards. A lower rate can save you a decent amount of money on interest costs. But the low rate often lasts only for 6 to 9 months, then increases, often around 14-16% if you make one late payment. If you transfer a big balance but do not pay it off within the grace period, you may have a higher interest rate compared to what you had at the beginning.

2. Rewards Credit Cards: This is best for clients who make most of their purchases using a credit card and pay off the balance on a monthly basis. Issuers of credit cards offer airline miles, cash back, and/or other points upon purchase of certain items based on the money you spend. Some reward credit cards, for example, offer as high as 5% cash back on certain purchases without annual fee. Some credit cards have high rates and annual fees but excluding the reward benefits. Other reward cards have unfriendly and complicated redemption policies. So it is important to read each offer very carefully.

3. Secured Card: This type of card is best for clients who in the past have gotten into credit card trouble. Using this type of credit card wisely will help fix or build a bad credit rating. But as you apply you will be asked to give a deposit which usually ranges from $200-$250. Many of these cards have high interest rates and annual charges so you should read the fine print carefully.

4. Student Credit Card: This card is intended for college students who know how to manage money wisely. Students could acquire this type of card even if they haven’t established a credit rating yet. Many issuers of this type of card offer additional benefits like bookstore discounts or cash back. But some credit cards have higher rates. It’s quite easy for students who are not experienced at managing finances and credit cards to quickly acquire unmanageable debts.

If you like to get free legal advice on credit, banking, and finance, you can simply visit Consumer Credit Legal Service Western Australia by clicking on the link provided.