Types of Credit Cards

Standard credit cards:

"Standard" credit cards are the offers you generally receive in the mail or see on TV. They are unsecured and available at almost any bank, store or financial institution. The interest you pay with one of these cards varies depending on your credit and current market conditions.

A 0% interest rate is often used to lure you into one of these offers. If the intro rate is for new purchases, it can be a great way to save money when purchasing new items. If it's for balance transfers, you can save money on your existing credit card debt and paying no interest.

* The best credit cards offer a 0% APR on purchases and transfers!

Whenever you consider a 0% interest credit card, add up all of the costs before you decide to switch. Be sure you understand how the rates and fees will increase after the introductory period is over. And look out for "balance transfer fees" or other hidden charges.

Since a "store credit card" is considered a standard card, be aware that some of these cards may have ridiculously high interest rates - up to 30% APR - after the introductory period. Unless you are able to pay the balance in full each month, avoid these offers like the plague.

Reward credit cards:

Reward credit cards allow you to earn rewards for daily activity on your credit card. There's a reward program for just about every interest you might have - from travel - to retail stores - to gasoline. The typical reward program provides 1 point for every $1 in purchases, pays 1% cash back, or provides an equivalent value in gift cards or merchandise. Additional rewards are often given for purchasing from selected merchants or at specific locations.

Be aware that reward credit cards usually have higher rates and may include additional fees when compare to standard credit cards. Use these cards sparingly - only when you know you can pay off purchases quickly. This way you can avoid higher interest charges, but still gain great rewards!

Popular reward programs include: cash rebates, reward points, airline miles and gasoline.

Cards for bad credit:

For individuals with bad credit, several options are available to help repair or improve your credit rating:

Unsecured credit cards are usually reserved for individuals with good credit. But there are a variety of unsecured offers designed for people with bad credit as well. While they tend to have higher rates and fees, you won't pay a security deposit!

Secured credit cards require a security deposit, but are the easiest to get approved for. Typically, your credit line equals the amount you deposit. But once you establish a positive payment history, you may be offered a higher credit limit in return.

Prepaid credit cards work just like a debit card. You can only spend what you deposit into your account. Not all prepaid cards will report your activity to the credit bureaus, so make sure you choose one that does if you want to build / improve your credit!

Specialty credit cards are offered to meet the needs of specific individuals or businesses. Like traditional cards they offer rewards, low intro rates, balance transfers, etc. But there are also additional benefits that might make these offers more attractive if you fall into one of these categories:

Business credit cards are for small business owners or corporate executives. They provide special features including; additional cards for employees, rewards, separate expense reports for business and personal purchases and higher credit limits.

Student credit cards help students build credit. The credit limit is kept low to help first time card users become accustomed to a monthly pay-off or payment. Plus, many offer rewards especially appealing to college students (and parents!).

No matter what type of credit card interests you most, read all the terms and conditions and figure out how they'll apply to you. Compare offers and read all the fine print! Only you can decide which credit card is best for you, but knowing how you'll use your card in the future is the first step in choosing...