Types of Credit Cards

Secured Credit Cards

Description: A security deposit of a predetermined amount is needed in order to secure the credit card, and the security deposit generally needs to be of equal or greater value than the credit amount. Collateral can come in the form of a car, boat, jewelry, stocks or anything else of monetary value. Secured credit cards are for people with either no credit or poor credit who are trying to build or rebuild their credit history. Cost: Cards that help rebuild credit often come with low credit lines (such as $250) and additional fees, such as an application fee, may apply. Be sure to read over any terms and conditions for these add-on services before applying. Example: In order to secure a $1,000 credit line on a secured credit card, someone may use their car or jewelry as collateral to get the credit. If they cannot make their payments on their credit card the credit card company may take their car or jewelry.

Balance Transfer Cards

Description: Balance transfer credit cards allow consumers to transfer a high interest credit card balance onto a credit card with a low interest rate. Many cards will offer 0% APR for an introductory period lasting several months to a year. Cost: The terms of balance transfer credit cards varies between offers, so be sure to thoroughly read the terms and conditions for each card. Example: If someone has three credit cards with high interest rates (APR), they can transfer their balances to a new lower rate card with a lower interest rate.

Low Interest Credit Cards

Description: Low interest credit cards offer either a low introductory APR that jumps to a higher rate after a certain period, or a single low fixed-rate APR. Cost: Before using a low interest card, read all the terms and conditions of the introductory rate so you will not be surprised by fees or accumulated interest. Example: Low interest cards can be very useful when consumers need make a large purchase because it allows several months to a year to pay it off with very low or no interest.

Student Credit Cards

Description: Many college students need a credit card, but they generally have little or no credit history, which makes it difficult to get approved for a traditional card. Student credit cards are specifically designed for those enrolled in accredited four-year colleges and universities to help them build a credit history from the ground up. Cost: Various APRs and Fees. Example: Compared to consumer credit cards, student credit cards are often scaled back somewhat in terms of rewards, features and other benefits, but they can still be a valuable commodity. If used wisely, a student can take the first step toward building a solid credit history with this type of credit card. Once they've proven financial responsibility, it will be much easier to qualify for reward cards and higher credit lines.

Prepaid Credit Cards

Description: Prepaid cards are not credit cards at all, but are used and accepted just like them. With these cards you determine the credit line by transferring however much money you'd like to have available to spend to the card. This eliminates the risk of running up credit card debt and makes the budgeting process much easier. Cost: Although most prepaid cards do not charge finance fees, other fees may apply, including monthly fees, startup or application fees, over-limit fees, ATM fees, reload fees and more. Be sure to thoroughly look over the terms and conditions for each specific card before applying. Example: A student transfers a monthly budget of $300 dollars to their prepaid card. They can spend $300, and making regular payments helps build credit.

Rewards Credit Cards

Description: Reward credit cards allow users to earn incentives for making purchases with their credit card. Points accumulate for each dollar charged on the card, and cardholders can redeem these points for various rewards. Cost: Reward cards usually require better-than-average credit for approval. But generally offer competitive APR rates and may have yearly enrollment fees. Example: There are several major types: cash back credit cards, reward points, travel/airline points, retail rewards, gas cards

Standard Credit Cards

Description: These credit cards are the most common and are readily available from most banks and financial groups. These lenders will give you access to funds up to your credit limit. ' Cost: various APR and fees Example: Balance transfer and low interest rate credit cards.

Bad Credit or Repair Credit Cards

Directions: If your credit score is less than satisfactory, it does not mean you cannot qualify for a credit card. There are several options available to those who have had bad credit in the past and for those who are currently trying to repair their credit. Cost: Prepaid cards do not accrue interest because you can only spend money you put on the card. Example: If you need credit or want to start repairing your credit by proof of action, there are several credit cards designed to help rebuild poor credit histories--secured and prepaid credit cards.