Various Types of Credit Cards and Its Benefits
July 7th, 2010 | 
Author: The introduction of credit cards has changed the dynamics of world business to a large extent. Now you don’t need to have money to actually buy something. Making purchasing power independent of immediate liquid cash has lead to greater consumer consumption and spending. There are various types of cards that give the owners a range of limits, benefits, rewards, offers and deals. These cards are handed out based on the customer loyalty and credit history and the overall income.
Standard
These are the most common form of cards that are given out by most banks. Standard credit cards are generally used by most customers for personal expenses and are usually of two types, balance transfer card and low interest card. The balance transfer card is generally offered to customers to allow them to transfer their high interest outstanding balances in various other cards to one single debt with low interest. Some companies even offer a 0% interest rate to start with. However, customers need to be careful when taking up such offers and make sure they know all the conditions of the card well.
The low interest card is generally useful for those people planning to make big purchases e.g. while setting up a house. The interest rate on these cards shoots up after a few months, so customers can save some money by making purchases at very low rates, compared to the EMI’s or bank loan interest rates they might have to pay.
Premium
Premium Credit Cards are those which are given out to a select group of customers in a particular income bracket and a good credit history. Gold and platinum cards are the best example of these cards which give many benefits over and above that of a standard card. This may include cash back deals at all major supermarkets and shopping malls, offers on movie tickets, airline tickets, jewelry etc. Another example is the reward point cards where the customers can accumulate reward points as they use the credit card. These reward points can later be redeemed by getting cash discounts, offers or gifts. Some cards even give customers free airline miles.
Prepaid And Secured Credit Cards
These credit cards are generally safer from a company’s perspective than other cards. This is one reason why these cards are available to those who do not have a credit history or have a tarnished credit history and hence cannot obtain a normal credit card. In the prepaid card, customer loads money on to the card in advance and any purchases are done by deducting the price from the available balance on the prepaid card. It doesn’t have any of the general problems of a standard card like credit limit worries, late fee etc. as it is always dependent on what the customer loads on the credit card.
The secured card needs a security deposit because of the poor credit history of the customer. The credit limit of the credit card is effectively equal to the value of the initial security deposit. This card too doesn’t have late fee etc. and most importantly you can never overspend with these cards.
