Credit Card Types

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Are all credit cards created equal? Before you compare the various credit cards offered by different merchants and banks, it is good to know a few main types of credit cards. This will assist you in deciding which credit card suits you better.

If you need to entertain your guests or travel frequently, the amount you spend may differ from one month to another. Charge cards will be useful to you as they do not have credit limits for your spending. They offer short term loans which have no penalties if you pay off the entire amount every month. Diners Cards and American Express offer such cards for travel and entertainment. For those who require extension for payments of bills, American Express offers other payment options. Some people may use the terms ‘charge cards’ and ‘credit cards’ loosely, but there are differences to the two.

Many of us should be quite with credit cards, the second type of major cards available in the market. The main credit card companies are Visa and Master Cards, and they work together with banks to issue the credit cards to you. The banks will determine the spending limit on your cards based on your income level. Different terms and conditions apply to different types of cards. If you only pay the minimum amount for your credit card payment, be prepared to fork out hefty sums that stemmed from your interest payments and new purchases. Due to the nature of unsecured loans, interest rates are considerably higher and over time, they may add up to huge sums.

Business Credit Cards are the next type of cards. These cards are meant for those with small businesses, although some banks give them to their customers holding personal credit cards. These cards tend to have lower interest rates and higher spending limits. These will help small businesses with cash flow problems as payments could be extended.

Finally, we have retail store cards from various major companies. Such cards are issued by shopping malls and other retail stores, or we have fleet cards, for various fuel purchases as well. Due to the wide variety of such retail store cards, the terms and conditions are not alike. These cards are usually only accepted in specific countries.

Since different types of credit cards offer different conditions and payment options, you need to decide what cards such as charge cards, credit cards, business credit cards and retail store cards suit you best.

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