Compare Credit Cards
There are many different credit card types to choose from. It’s important that you make sure to get the right credit card for your needs or you could end up paying a lot in fees and extra charges.
In part, your credit card choice should be based on credit score, your income, and your expected purchases. Check out our chart below to compare credit cards to see which credit card type is the best fit for you.
How do you get a credit card?
You can apply for a credit card and, based on your credit score and income, you can choose credit cards based on certain rewards, rebates, or purchasing needs.
Compare credit card offers to figure out which features and rewards are most important or relevant to you
It’s important that you realize that you can end up accruing debt because of credit cards and you can hurt your credit score by failing to make timely payments. You should carefully compare credit card fees and interest rates before signing. Afterall, credit card companies make money off of your business with them. Many companies charge annual fees for your ability to use their credit cards. And when you fail to make payments, credit card companies may charge you late fees. You may have to pay interest on your balance.
Credit Card Types
Standard Credit Card
You are probably already familiar with standard credit cards. These are credit cards that have don’t offer incentives or bonuses. You have a certain amount of credit and you can use your standard credit card for purchases until you have reached your credit limit. An example of a standard credit card would be a gold or platinum VISA card issued by your bank, with no additional features.
Your credit limit is based on your credit score. Your bank determines an amount that they think is reasonable for you based on your credit score. This can vary pretty greatly based on the kind of customers that your bank focuses on. For example, Bank of America reports an average starting credit limit around $11,288 while Capital One reports average starting credit limits around $3,254.
You usually don’t need to repay your entire balance in full at the end of each month (although it’s a good idea), but there is usually a minimum amount that you need to pay back after a certain period. If you fail to pay this minimum amount, you will accrue interest.
Secured Credit Card
You will probably be able to get a standard credit card with a fair credit score, but if you have a bad credit score you may need to get a secured credit card like the Bank Americard Secure Credit Card with Bank of America.
Secured credit cards allow customers with bad credit scores to get a credit card with a low credit limit. To get a secured credit card, you have to place a deposit on the card in addition to your monthly payments. In some cases, your bank will return your deposit if you are consistent with timely payments.
Compare credit cards to see what credit limit different companies will offer. You may be able to get a pretty good credit limit on some secured credit cards, but if not you might want to work on your credit score so you can get a standard credit card.
Take note: if you are a college student and you don’t have a credit score, check out student credit cards. These are cards like the Discover Student More Card. These credit cards are designed to let students start building up a credit score while paying low starting interest rates and getting rewards for all kinds of things like a high GPA and timely payments.
Premium Credit Card
Premium credit cards are basically the same as standard credit cards with the added feature that they offer incentives and rewards for timely payments. An example would be the Capital One VentureOne Rewards Credit Card.
Popular reward programs include
- Airline mile credit cards
- Shopping rewards cards
- Concierge services
- Luxury gifts
- Cash back credit cards
You need to have a pretty good credit score in order to qualify for a premium credit card. Generally, credit card companies won’t give a premium card to anyone with a credit score that is lower than 720. They may also have standards for minimum income levels and interest rates may be higher for rewards cards. In addition, Premium Rewards cards usually charge an annual fee.
Charge cards are different from standard credit cards in that you don’t have a credit limit. Instead, you can charge as much as you want to your charge card but you have to repay the entire amount at the end of the month. An example of a charge card would be an American Express Green Card. You usually have to have a very good credit score to get a charge card.
A common misconception with charge cards is the idea that charge cards don’t have spending limits. In fact, there are limits on charge cards but they are based on a variety of factors and may change very quickly, even from month to month. These factors may include your payment history, your charging history, your income, and even national economic trends.
If you fail to repay the entire amount, you could accrue penalty fees or even lose your card altogether depending on the agreement that you make with the credit card company. However, some charge card providers will allow you to choose an extended payment program in certain cases. This means that you can take a longer time to pay for a larger purchase.
Limited Purpose Credit Card
Limited purpose credit cards are sponsored by a specific institution and can usually only be used at that institution and its partners. These may include:
- Gas rebate cards (like the Discover Open Road Card)
- Food cards (Sam’s Club Discover Card)
- Department Store cards (like a Macy’s Credit Card)
Business Credit Card
Businesses credit cards allow a business to combine all of its expenses on one card, rather than distribute costs among individuals or place the entire burden of all of the costs on the business owner. This allows business owners and employees to separate business expenses from personal expenses. An example of a business credit card is the Ink Plus Business Card.
Credit Card Offers
When you choose a credit card, you should take into account the following credit card offers:
- Credit limit amount: Different credit card companies can give you vastly different quotes for a credit limit depending on what they consider to be a good credit score. Compare credit card companies to see which will give you the credit limit you need before choosing one that gives you too much or too little credit.
- Rewards or cash back: When credit cards do offer rewards and rebates, you should be certain that you are choosing a card with the reward you want. Many rewards cards save you money on food, gas, and travel, but the rebates aren’t always equal.
- Limitations on items you can purchase: Some credit cards, like department store credit cards, can only be used for certain items. For example, a Nordstrom Card can only be used at Nordstrom.
- Amount that you will be able to pay back each month: You should be careful to choose a card with a credit limit that you can handle. You should especially be careful with charge cards. If you aren’t used to having a card without a credit limit, or if you are bad with your finances, you should stay away from a charge card.
- Amount of interest that you can handle: When you sign up for a credit card with a certain credit limit, you have to accept the terms of the card. This means that you accept the interest fees associated with late payments. If you have accepted a card with terms you can’t handle, you could end up hurting your credit score a lot.
If you are concerned about any of the extra expenses that you may have with a new credit card, you may be want to look into the following credit card offers:
- 0% APR on balance transfer credit cards: These companies allow you to control or adjust your debts so that you can avoid paying interest on some very large debts.
- 0% APR on purchases credit cards: These cards allow you to avoid collecting interest on your purchases for a certain period.
- Cash back credit cards: These credit cards reward you with a certain small percentage of cash back on purchases.
- Credit cards with no annual fees: These credit card companies don’t charge you an annual user fee. Compare credit cards with and without annual fees to see why certain cards have annual fees and some don't.