Advantages of Credit Cards

Credit card companies and banks depend on the fees and APR (annual percentage rate) they charge their cardholders for their profits. There are many types of credit cards and not all of them are right for all consumers. Credit cards are generally unsecured debt, or money the cardholder owes that has no backing collateral. The exceptions to this are the pre-paid credit card and secured credit card, both which can be used to repair damaged credit.

A secured credit card is backed by collateral, or something of value that the credit company can seize if the cardholder fails to pay their balance. The collateral is usually equal to or exceeds the available credit balance.

Consumers who are trying to build up their credit, whether they are just starting their credit history or trying to recover from poor credit history generally use these cards. Prepaid cards are becoming very popular with the parents of young college students as a way to keep them within a budget but still give them a bit of freedom in how they spend their allotments.

Consumers who try to avoid paying higher interest are using Balance Transfer credit cards more and more. Transferring a balance from a high interest credit card to one with lower interest can be a real money saver.

Some cards have an introductory rate of 0% APR which increases after a specific number of months. If you have a large balance on a card that has a 16% APR and transfer it to a 0% card, you’ll save hundreds of dollars in interest. For this reason, balance transfer cards are doing a great business. The terms very widely between cards, so be sure that you know the conditions of each card.

Balance transfer cards can be very useful when purchasing large-ticket items like appliances on one credit card then transferring the balance to the 0% card.

Cash back credit cards reward the cardholder by returning 1% or sometimes more, of their purchases. Even mortgage companies have jumped on the cash back bandwagon, applying the 1% to the cardholder’s mortgage principal.

Over time, and as long as you don’t incur interest fees by carrying a balance from month to month, that 1% can be a significant contribution to paying down your mortgage. Some credit cards send the cardholder a check while others apply the rebates to the balance owed, if any.

There are other types of rewards for using credit cards, too. Consumers can get cards that award them mileage on airlines, points that are used to purchase merchandise, rewards of gasoline rebates or points toward lodging or entertainment. Some of these cards, however, charge a yearly fee to cover the costs of rewards so it pays to read the terms and conditions of such cards.

When used responsibly, credit cards can be a real asset. They are convenient, accepted nearly everywhere and make it easy to track expenses. In addition, unlike cash, if they are stolen your losses are minimal or none.

Article Source: http://www.articlesbase.com/credit-articles/what-is-your-best-credit-card-type-354243.html

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Joe Kenny writes for Credit Cards Web, offering credit cards or onlystop.com for some great credit cards, for US residents with credit card debt visit Rebuild for debt relief

The majority of the cards you’ll probably notice offer lucrative schemes and rewards. There is an endless list of types of student credit cards, so it becomes very difficult to select the appropriate one for you. All these types of cards can be differentiated on the bases of interest rate; cash back amount, annual fee, bonus and rewards. So you have to pick up the one which is the most beneficial for you. Few types are discussed below:

1. Low-interest credit card:

i. It offers a low initial introductory annual percentage rate (APR). ii. It also offers significant savings on interest when the amount of large purchases is paid back before the end of introductory period.

2. Balance transfer credit card:

i. It offers consolidation of credit card debts.

ii. To transfer the debt to a low APR plastic card can save a huge amount of interest.

3. Reward credit card:

i. They offer various hotel discounts, frequent flyer miles, free fuels etc just to promote the usage of card.

ii. It is beneficial for those students which are flying (travelling) frequently and are more engaged in shopping etc.

iii. Based on how much is the usage of student credit card over a definite period of time.

4. Airline mile credit card :

i. It is almost same as the card mention above but the reward can be redeemed only in the form of air travel.

ii. A free air travel given per mile for fixed amount of dollars you spend.

5. Cash-back credit card :

i. It pays back cash rewards for making purchases with the card.

ii. Excluding interest and finance charges, it pays around 1 cent per dollar spent.

iii. It is preferred if you are regular in paying off payments every month.

6. Secured credit card:

i. It is the best option if you have a very little credit.

ii. It is secured with collateral or cash deposits.

7. Pre-paid cards :

i. It is actually a misnomer as it works same as gift cards for retail shopping.

ii. You have to deposit a certain amount and then you can use that card to make purchases up to that amount.

iii. It generally offers bonus and rewards. Moreover no credit check is required.

Major credit card providers are:

• American Express
• Visa
• Citibank
• Discover
• MasterCard
• Capital One

Article Source: http://www.articlesbase.com/credit-articles/about-credit-cards-types-of-credit-cards-1509526.html

About the Author

For more information on Credit Cards and how to manage your credit utilization ….. Read ….About Credit Cards

Freelance consultant with interest in many subjects.