So you probably know what a credit card is. You’ve also probably heard about cash back percentages and travel rewards points. But what about secured credit cards and unsecured credit cards? Then of course there are balance transfer credit cards and gas rewards credit cards – had enough? The sheer volume of credit card options can be overwhelming which is why we’re here to help you be a more informed credit consumer. Knowing what types of cards are out there and how they can benefit your own financial wellness will help you decide which one makes the most sense for your wallet.
Secured credit cards
Secured credit cards can be a great option if you have poor or no credit history. The concept is simple, you front a deposit which usually acts as your credit limit in order to secure a credit card. So, if you put down a $1,000 deposit you get a $1,000 credit limit. While rewards aren’t typically on offer with a secured credit card, it’s a great way to start building credit without getting into too much trouble (you can only spend as much as you deposit!).
Unsecured credit cards
Unsecured credit cards don’t require any type of deposit in order to use them. These are basically credit cards as we know them. You apply for these and, based on your credit history, are approved to use them. Rewards and cash back credit cards are almost always unsecured cards. These are also a great way to help build credit given you use them responsibly.
Travel credit cards
You’ll never guess what these credit cards provide rewards on… that’s right, travel! Rewards cards will often have annual fees or membership fees that you pay upfront in order to take advantage of the benefits. Travel cards will provide either points or miles that you can use towards redeeming travel benefits. If you’re all about exploring, then this could be the type of card you’d want to take advantage of. Do your homework and figure out which card offers the best rewards structure for where you spend most and with the airlines you use most frequently.
Cash back credit card
Unsurprisingly, these cards offer you cash back on qualifying purchases you make throughout the year. The cash can be in the form of statement credits, gift cards, or used towards purchases online through qualifying merchants. If you like the flexibility of a more broad-ranging benefit to your credit card rewards then a cash back card could be the right choice for you. Again, these will likely have an annual fee you’d need to pay which you may want to think about when making a decision on which card to apply for.
Gas rewards card
If you drive a ton for work (or for fun), then a gas rewards card could be an awesome option. These cards will offer cash back on purchases at gas stations and, often, also provide attractive rewards for general travel purchases. Again, if you find yourself driving for work or have a particularly long commute, this could be a great way to get strategic with your gas expenditures.
Balance transfer card
Balance transfer cards allow you to transfer credit debt from a card (or cards) onto the new card. They’ll usually have a 0% APR fee associated with the transfer for a fixed period of time. Because of this, you’ll want to make sure you put in place a plan to get the debt paid off within that time frame. It’s also worth noting that balance transfer cards can often carry a transfer fee based on the total sum of debt you’re carrying over. These can be a great way to consolidate debt or just shake off some of the super high-interest rates you may be paying on other cards.
There is no shortage of credit card options available to you out there which is why a little research on your end can go a long way. Figure out what makes the most sense for your financial situation and find a credit card that provides the most benefit with the least amount of risk. And while you’re at it, if a health & wellness credit card sounds like something you’d be interested in, head over to our signup page to get notified with all the latest Paceline Card updates!