Types of Credit Card

There are different types of credit cards tailored to suit the different types of financial needs of the consumers.

Standard credit card: This is the most common type of credit card available in the market. It functions on the principle of revolving credit which means that you always have a balance up to a certain limit. When you make a purchase, the credit used is made available in your balance when you make your payment. According to the credit card policy, a user has to make a certain minimum amount of payment within the due date other wise a late fee is applied.

Premium credit cards: As the name suggests, the card comes with certain benefits and incentives over and beyond the standard credit card. These include offers such as cash back rewards, travel upgrades, reward points, discounts etc. On the flip side, these cards come with a higher fee. Consumers have to fulfil certain income and credit score criteria to be eligible for a premium credit card. Examples of premium cards include gold and platinum credit cards.

Charge cards: Unlike the standard and premium cards, charge cards do not have a credit limit and there is no concept of minimum monthly payment. The balance on the charge card has to paid at the end of the month. As there is no minimum balance, there in no finance charge either.  However, the user is subject to late fee, charge restrictions, or card cancellation depending on the terms of the card issuer company.

Limited purpose cards: These cards can be used in limited locations. Gas credit cards and store credit cards fall under this category. In other respects, these cards function similar to standard credit cards. There is a minimum balance that you have to pay at the end of the billing cycle, failing which finance charge will be levied.

Business credit cards: As is clear from the name, these are specially designed for business use. The advantage of these cards is that businessmen can keep their professional and personal transactions separate. Business credit cards can be either standard or charge credit cards.