Like so many other products, consumers have a lot of options when it comes to credit cards. It seems like every time I check the mail or visit a website there’s a new offer with enticing benefits. Picking the right type of credit card is an important decision that can affect the overall value and cost of using it.
If you’re in the market for a new credit card it can help to narrow the options down to a specific subcategory. Here are some of the most common credit card subcategories you can choose from.
Credit Cards For People With Poor Credit
Believe it or not, there are credit cards for people with poor credit. It may seem like a big risk, but there are millions of people who are working to rebuild their credit after the recession. Responsible use of a credit card can help bump up your score if you can get one.
Credit card companies that cater to consumers with poor credit typically charge a higher than average interest rate and limit the credit line in order to minimize risk. So don’t expect to see sky-high limits with this type of credit card. The maximum that can be charged will probably be somewhere along the lines of $1,000. But it’s a good place to start if you want to improve your credit.
Secured Credit Cards For People With No Credit
The average credit card debt for college students has steadily dropped over the years, partly because many don’t yet have a credit card. Statistics gathered by WalletHub show that just 30% of college students had a credit card in 2013. That’s down significantly from 42% in 2010.
While this is helping minimize student debt, it also means many millennials have never used credit at all. Therefore, they have no real credit score for lenders to check.
That’s where a credit card for people with no credit can help. They’re made for people who are new to using and managing credit. Sometimes these types of cards are set up more like a debit card. With a secured credit card you deposit cash as collateral to establish the credit line.
Cash Back Rewards Credit Cards
For consumers with good to excellent credit, there are even more credit cards with countless perks. One of the most popular options is a cash back reward card. This credit card subcategory is so popular the perks have gotten better over the years due to competition.
A cash back reward credit card is like getting a small discount every time you make a purchase. It may only be 1-3%, but over time it really adds up. Paired with additional sign-up bonuses and low annual fees, a cash back rewards card can save a family hundreds of dollars each year. Just make sure you’re clear on what purchases qualify and how the cash back rewards can be redeemed.
Travel Rewards Credit Cards
Travel isn’t cheap these days, whether you’re on the move for work, visiting family or taking a vacation. But people with travel rewards credit cards at least get a little back and enjoy added conveniences.
Some of the perks that come with a travel rewards credit card include:
- Free or reduced airfare
- Free or reduced hotel accommodation
- Free travel upgrades
- Complimentary travel insurance
- Discounts on car rentals
Frequent fliers should look for a travel reward card that partners with your preferred airline. There are also cards that offer rewards no matter which airline, hotel or car rental company you use.
Luxury Credit Cards
Hey, big spender! High-income earners use credit card users too, and some companies are known for targeting them. These black or platinum credit cards, as they’re often referred to, come with perks that are tailored to the consumers that surround themselves in luxury.
One of the most notable features of this credit card subcategory is concierge service. The lucky few who are offered access to luxury credit cards can people on call to help them arrange travel, get early access to tickets and so much more. Having one of these cards isn’t just about being able to charge purchases. It’s about belonging to an exclusive membership where the annual credit card fee is often hundreds of dollars.
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