3 Types of Credit Cards Everyone Should Have
If you’ve ever tried to compare credit cards, you know that it can be overwhelming. There are thousands of cards on the market, each with different features and benefits that could appeal to varied people. When used correctly and in moderation, credit cards can be used to your advantage. If you’re new to the world of cards, here’s an overview of the different types of credit cards and what they offer.
Rewards Credit Cards
Reward credit cards enable you to earn points or miles for each dollar you spend, whether that’s on airline tickets, hotel stays, or car rentals. Many reward cards also let you redeem your points for cash back, gift cards, and merchandise.
A flat-rate card, also known as a flat-rate rewards card, is a type of credit card that provides a consistent reward rate. Most flat-rate cards earn at a rate of around 1.5%, which doesn’t give you the opportunity to earn rewards at top tier rates on spending categories you may prefer, but they’re great for taking advantage of everyday spending across a broad range of categories, especially when there are special offers available that can sometimes double your rewards rate.
Low-Interest and Balance Transfer Cards
If you’re looking to transfer balances or pay interest on new purchases, there are cards especially meant for you. A low-interest card helps you keep your spending in check by charging much lower annual percentage rates (APRs) than other credit cards. Many charge 0% on all purchases for an introductory period that could last anywhere from six months to 18 months.
A balance transfer card is ideal for saving on interest and paying down your debt more quickly. It works by transferring a credit card balance from one card to another, giving you a lower-interest option while that debt is paid off.
Credit-Building Cards
If you’re looking to build or improve your credit score, a credit-building card is just what you need. These cards help you start the process of establishing or rebuilding your credit while giving you all the privileges that regular credit cards offer. These cards are useful if the consumer anticipates needing a high credit limit in the future or if they want to make responsible spending decisions before opening a card with a high limit.