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What Are Credit Cards, And What Are Their Different Types?

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What are credit cards?

The use of Credit Cards is straightforward and convenient. They are small-sized plastic cards. Cards such as these allow you to pay for goods and services on credit and then return that cash at the end of each month, or in short, it will enable you to shop now pay later. Your credit card issuer offers two payment options: you can choose to pay the total amount of credit you borrowed or a minimum fixed amount each month. If you pay only the minimum amount, remember that you will get charged interest on your outstanding balance. In addition, there is a credit limit set for you by your card provider.

How many types of credit cards exist?

It’s easy to be overwhelmed by the mere number of credit card options available to consumers in an era where so many credit card types are available. However, you don’t have to learn everything about every credit card on the market. Instead, it’s much simpler to determine what type of credit card is most appropriate for your situation and then focus your efforts on determining which of those cards will help you pay later.

  1. Basic Credit Cards

It is the perfect credit card for people who wish to try out using credit cards. You’ll be assigned a small credit limit based on your income, and you’ll be able to make purchases within that limit. However, there are no additional benefits provided on transacting with the card.

  1. Secured Credit Cards

Individuals with poor credit histories can obtain a secured credit card by making a deposit equal to the card’s credit limit. The deposit then acts as a security to issue credit cards for banks. You might be able to get back your security deposit if you make payments consecutively for several months.

  1. No Annual Fee Credit Cards

A no annual fee credit card does not levy a yearly fee for credit card usage. It can be considered a primary credit or slightly above that level that provides very few benefits. For example, an individual at the entry-level credit card usage or someone who makes limited credit card use might prefer a credit card with no annual fee.

  1. Low-Interest Credit Cards

Credit cards that offer lower interest rates than those from a similar category are low-interest credit cards. In contrast to balance transfer cards, these cards do not offer much lower interest rates, and the rates do not last as long as they do with balance transfer cards.

  1. Balance Transfer Credit Cards

While most credit cards offer the option to transfer a balance, a balance transfer credit card comes with a low-interest rate for a stipulated period. For example, if your current card has a high-interest rate, you might consider transferring the outstanding balance on your current card to a balance transfer card with a low-interest rate. In addition, some Balance Transfer Credit cards offer an opening rate of 0%.

  1. Rewards Credit Cards

You will receive rewards for each rupee you spend on your rewards credit card. In addition, as an account holder, you get reward points for certain types of transactions you make with the rewards cards issued by each bank. Examples include grocery shopping and online bill payment.

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