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Types of Credit Cards

Nov. 17, 2011
Credit Cards
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There are four main types of credit cards:

  1. Rewards
  2. Low Interest
  3. Balance Transfer
  4. Secured.

The first is meant for people who pay their bills each month. The second and third cards are best if you usually carry a balance or already have credit card debt, and they often come hand in hand. Finally, secured cards are for those with bad or no credit. Check out the links on the left for a more complete description of the following credit cards.


Type of Card Builds Credit? Borrow money? Upfront deposit?
Regular credit card Yes Yes No
Secured credit card Yes Yes Yes
Debit card No No Yes
Prepaid debit card No No No


Rewards Credit Cards: A rewards credit card, as the name implies, earns rewards on your purchases. Some cards will pay out at a flat rate of 1%-2%, while others will give an extra bonus in predetermined spending categories. Rewards are paid out in a variety of forms, including checks, gift certificates, airline miles and free hotel stays.

Low Interest Credit Cards: Low interest (or low APR) credit cards are best if you carry some credit card debt month-to-month. Depending on your financial situation, you can choose a card with a reliably low ongoing interest rate, or one that has no interest for an introductory period.

Balance Transfer Credit Cards: Balance transfer cards are meant for those who already have a lot of credit card debt. They allow you to shift your debt from your current card to a new one, and give you a period of 6-21 months to pay it off interest-free. There is usually a one-time balance transfer fee, though, of up to 5%.

Secured Credit Cards: Meant for those with bad credit, secured credit cards require you to post collateral when you open your account, usually equal to or greater than your credit limit. With a secured card, you can build up your credit score and eventually move on to an unsecured card.

Credit card image via Shutterstock.