Available Types Of Credit Cards

Credit, credit, everywhere …

Everywhere you look these days companies are offering you credit. There are hundreds of different brands of credit card available and there are dozens of different types of credit card too. We take a brief walk through some of them.

Reward cards

Reward cards offer points to be redeemed against specific purchases such as Nectar points, Air Miles or cash equivalent points to be used at specified retail outlets. Many global retail outlets like Virgin and Sony do their own cards to encourage brand loyalty. The Sony scheme, for example, is called Pulse Beats and points can be collected and used as discount against a whole range of Sony goods. The interesting twist here is that you get triple pulse beats if you use your Sony credit card in a Sony outlet.

Cashback

Cashback cards give you money back on your card every time you use it. Typically cashback is about 2% of expenditure and will be awarded annually although you’ll be able to see how much you are owed on your monthly statements.

Charity Cards

Charities have never been backward in utilising every possible way to raise money, so the introduction of charity credit cards was a predictable step. Usually the charity receives a donation from the lending company for every application for the card they receive and a small percentage every time you make a purchase. This kind of affinity can be very helpful for the charity, as an example, since its launch in 1996 the MBNA Childline charity card has raised over £100,000.

Balance Transfer cards

Many cards offer zero percent incentives on balances transferred from other cards. These are to encourage people to change and many do, often! These 0% balance transfer cards were supposedly to encourage people to be loyal to the particular card they swapped to. But as it’s so easy to change, many people become what are called “rate tarts”. Most of these credit cards offer substantial zero percent periods such as 9 to 12 months as the big lenders battle it out between each other, but watch out for the APR when the holiday is over!

Store cards

Store cards are still credit cards, but many people think of them as being different. All you are doing is getting credit from a particular retail outlet to buy their goods. Infamously the interest rate on these cards is very high, so many people end up paying well over the odds for items they buy using these cards and leave a balance on them for any length of time.

Pre-paid cards

These were designed for people who have poor credit ratingsand are an alternative to ‘Bad credit-credit cards’. Pre-paid cards require the owner to pay a sum up front when they apply for the card, so there is no credit as such as you are then spending your money. Hence there is usually no interest fee. There are of course all the usual requirements and penalties to ensure the user stays within their spend limits.

Gold and Platinum cards

In the nineteen eighties, once the initial wow factor of credit cards started to subside, elite cards were introduced. Like so many things in the image conscious eighties these gold and platinum cards supposedly said something about the user. Usually they required a minimum income which was higher than average and so indicated that the user was a financial success. There was an exclusivity about them. These days all that has gone. Most of the gold and platinum cards simply offer slightly different features in a lenders range of credit cards.

The array of credit cards available today is remarkable and given the convenience of the plastic is it any wonder?

Tags: Credit history, reward cards, Beats, Virgin, Gold, Stored-value card, particular retail outlet, transfer