The Type of Credit Card Best for You

Credit cards can be a lifesaver or an evil tool to keep you poor and forever in debt

. They are of great benefit if you know how to use them, how to manage the money you earn, and how to spend wisely. They are not for people who have irresponsible spending habits and have no sense to save money. Not all credit cards are the same although they all involve spending money you still have to earn. For this reason alone, you should consider first and foremost your ability to always pay on time before getting one. Each person has different financial needs which give way to different credit card options. Now having considered this, let's look at the different types of credit cards and how you can determine which one is for you and how you can benefit from using each one.

Most people would need a standard credit card. This means having a revolving balance which you must keep below the prescribed limit by the issuing company, usually a bank or a financial institution. You use up your credit after making purchases, which you must pay on or before a set date. You can use your credit again after making a payment. Credit card companies are strict in imposing finance charges to your outstanding balance upon the month's end. They will demand that you pay a minimum amount in order to avoid penalties if you are unable to pay the full amount.

Premium credit cards have more features than standard cards. You get cash back, travel upgrades, reward points and other attractive incentives for using this type of card. However, such cards require a minimum income and credit score for you to qualify. They also have higher fees.

People who can manage their money wisely will benefit a lot from charge cards. These do not carry any credit limit and the balance must be paid in full at the due date. Because of this, issuers do not impose a minimum payment or finance charge although you will be charged a fee for late payments, including restrictions on the charges you can make or even card cancellation. You can also avail of limited purpose cards that you can use at specific locations only such as gas stations or stores. There are also secured credit cards which are perfect if you don't have a credit history, or have damaged credit. To avail of this type of card, you need to make a security deposit which will also be your credit limit. Prepaid credit cards on the other hand require that you load or deposit money into it before you can use it for purchasing goods or services. You use them just like debit cards. There are not minimum payments or finance charges. Your credit limit is equal to the amount you loaded beforehand and once used, you need to load again to continue using it.

The type of card you need depends on several factors, the most significant of which is your ability to pay on or before the due date. If you are able to fully pay your balance at the end of the month, you would be better off with a charge card. A credit card that carries a low interest rate is good for you if you will not be able to pay in full at due date.

The Type of Credit Card Best for You

By: Peter Andrew

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