There are many different types of credit cards so if you are going to apply for one you would be best to find out which would be the best kind for you and your financial situation.
The main variation in credit cards is the interest rate which varies between the different providers. Search around to find the best option when taking out credit cards.
The article below explores the various types of credit cards and the terms used by the lenders and what they actually mean.
Credit Cards Terms Explained
There are many different terms used by lenders and you may not be fully aware of what these terms mean. Here are some of the terms used by the lenders and what they mean.
- APR - This means Annual Percentage Rate and measures the amount of interest your credit card will cost you and then displays this in the yearly amount percentage. So basically the lower the APR the lower the amount you will have to pay on a yearly basis for your credit card. As well as this interest rate there may well be a standard annual fee for the use of the lenders services.
- Transaction Fees - You may be charged for certain transactions such as drawing credit from a cash machine. It is usually a set charge and you should be informed of any such charges in the terms and conditions when taking out your credit card.
- Credit Card Limit - This as you may gather is a limit that is set on the amount of credit you can draw and is agreed at the time of your credit card being taken out. When your credit limit is reached you will not be able to draw any more from your credit card.
Types of Credit Cards
There are different types of credit cards available just as there are different rates some different types of credit cards available include the following.
Cash Back Credit Cards
Cash back credit cards offer you a cash back scheme but not generally cash in hand it will more likely be credit for you to deduct from the next months spending. To get this kind of credit card you generally need to have a certain salary level and there may also be a required amount being spent each month.
Charity Credit Cards
With charity credit cards the bank will donate a certain amount determined by the amount you spend to a chosen charity, so for every amount you spend there will be a certain percentage donated to a specified charity.
Pre-Paid Credit Cards
Pre-paid credit cards mean that the person can never spend more than they actually have available on their credit card because they can have a certain amount charged to their credit card with every transaction for them to spend.