your credit card: What Types of Credit Cards Are Available?

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Anyone who receives preapproved credit card offers in the mail knows there are hundreds of different credit cards. Most cards fall into a few major categories depending on their features. The best credit card for a person depends on his credit history and how he plans to use the credit card. Most people can choose from a few different types of credit cards to get the best benefits for different types of purchases and situations.

General Credit Cards

Companies such as Visa, MasterCard and Discover issue general use credit cards. Terms on these cards vary, but they often offer lower interest rates than specialized types of credit cards. Some general use credit cards have a promotional APR of 0 percent for the first six months or year to entice new customers. This type of credit card is likely to be best for people who carry a balance from month to month because it has the lowest interest rate.

People who use credit cards frequently can benefit from rewards cards. With these cards, purchases earn points the user can redeem for rewards, including cash back, airline miles, gift cards, electronics and other items. Some rewards cards offer rewards in only one category or with only one business and others offer more general rewards. Specialized rewards cards include airline cards, gas station cards, hotel cards and cash back cards. People should consider the value of their rewards before getting a rewards card because an annual fee or higher interest rates may cost as much as the annual rewards are worth.

People who have a bad credit history and cannot obtain a traditional credit card may choose to get a secured credit card. Although the card looks and works just like a regular credit card, the user must make a security deposit in a savings account with a bank and has a credit line equal to the amount of the deposit. Secured credit cards that report to credit bureaus help people build credit history. Because secured credit cards often have annual fees and high interest rates, people with good credit should avoid them.

Store credit cards are issued by a particular retail store and can only be used to make purchases at that store. Some store cards can be used at a family of stores rather than just one store. For example, the Old Navy store credit card also works at Gap and Banana Republic. In most cases, users accumulate reward points for purchases and can cash in reward points for discounts off merchandise from that store.

Charge cards look like credit cards but there is a difference. A charge card must be paid in full every month, whereas a consumer can carry a balance on a credit card while making only the minimum payment.