Types of Credit Cards
As far as credit card types are concerned, one thing is certain – they do really come in all varieties. And with the fierce competition among credit card issuers, it is a safe bet that newer and newer credit card types are to be offered. Although unsecured credit cards (also called standard credit cards) are still the most common, there are many other varieties of credit cards that different institutions offer. All these different types are targeted at different groups of customers – for instance students or the business and therefore the advantages and disadvantages vary as well. Many of them have the general advantages and disadvantages of credit cards as a whole, while some of them have bonuses and limitations of their own. Most of the credit cards types that are briefly mentioned here are described in more detail in separate articles.
It is not possible to write about every single kind of credit card under the Sun but introducing briefly the major types is reasonable. First, it is necessary to make clear that there are many classifications of credit card types. For instance, a popular classification is to divide credit cards into secured and unsecured. Generally unsecured credit cards are the most popular type of credit cards and very often the other varieties are forgotten. Secured credit cards are relatively new and their major target are people who can't get another type of credit because their credit rating is very bad.
Another classification is according to the type of customer they are targeted to – student credit cards, business credit cards, airline miles credit cards. Student credit cards and business credit cards are issued respectively to students and businesses only, while airline miles credit cards, gas station credit cards, store credit cards are issued to everybody who is a customer at these places, in most cases regardless of his or her social status.
Credit cards are also classified as standard, gold and platinum and the major difference is in the amount of limit allowed and the interest rate. If the interest rate is the criterion for classification, then credit cards can also be divided into zero rate, low interest rate, high interest rate, etc. Usually the division according to interest rate is not for ever because for instance zero rate credit cards have 0% ARP for the introductory period only and then rates soar.
Another popular category of credit cards are rewards credit cards. The already mentioned airline miles credit cards fall into this category as well because customers are rewarded for frequent flying or flying a given mileage. Store credit cards could also fall into this category, provided that they give incentives to frequent shoppers or to shoppers who purchase goods or services above a certain amount.
As you have probably already guessed, one and the same credit card can fall into more than one type. There is nothing wrong in it. In fact, this is good because it gives you additional options when you are choosing your new credit card. However, never forget that what looks like a benefit (i.e. cash rewards), might actually be a drawback, so never judge about a credit card based only on the advantages it offers!