subject: The Three Basic Types Of Credit Card Offers Explained [print this page] In todays credit card world there are many different types of of card offers to choose from. Some have advantages for some people while other cards have disadvantages. However, there are three basic types of credit cards on the market that you should know about. This article will explore the differences between each type as well the pros and cons associated.
Secured Credit Card Offers
Anyone who has ever had any kind of credit problems will gain the most benefit from the use of a secured credit card. For someone with good credit a secured card is not the right choice. Secured credit cards have higher rates and fees than standard credit card offers available. The biggest advantage to having a secured credit card is the ability to reestablish bad credit. A secured credit card is guaranteed with a cash deposit to the issuer. If the the card holder defaults, then the issuer can re coop any monies that would have otherwise been lost. However, the main purpose the of the secured credit card is to improve your credit. Pay the bill on time every month and watch your credit score improve over time. Secured credit card offer issuers will report to the credit bureaus on a regular basis. Anyone can get a secured credit card so long as they are able to put down the deposit. It does not matter your credit rating. Most issuers grant credit lines between $500 to $10,000. Typically, the amount of your deposit determines your line of credit. Therefore, if you pay you put down $2000, expect to have a credit line in the same amount. As mentioned before, you will loose part or all of your deposit if you default on the credit line.
Reward Credit Card Offers
Rewards credit card offers are perfect for anyone with good credit who spends money every month using their credit card. This person should always pay their bill on time, either the balance in full or makes good sized payments every month and manages their finances well. Those who do not have the discipline or the ability to keep up with payments should stay away from this type of credit card offer.
The biggest advantage of a rewards credit card offer is that you are able to earn points that can be used towards other purchases including cash back. Many rewards cards offer categories from which you may choose. These categories usually range from groceries, gasoline, restaurants, hotels, rental cars, airline tickets, home improvement, department stores as well as pharmacies or other participating vendors. Every time you use your rewards credit card offer you earn points. These points are earned based on how much you charge on your card. Some rewards card issuers will give you 1 point towards every dollar that you spend. They even go as far as selecting categories from which you will earn double points.
Rewards credit card offers can add some additional savings to your budget, but they also have some disadvantages as well. In order to give you those rewards, issuers must charge additional premiums in the form of higher interest rates as well as higher fees. Pay your bill late a couple of times and run the risk of loosing all your rewards points. Some rewards card issuers will let you pay a redemption fee, however, there are many that wont. In addition to loosing all of your rewards points you can also end up in a higher interest bracket. Furthermore, if you do the math you will find out that your rewards benefits do not exceed the interest rate if you do not pay your balance in full. Rewards credit cards are utilized best by those who pay their balance every month religiously.
Low or Zero Interest Credit Card Offers
Most people with a good credit score that are looking for a credit card offer usually seek a low rate or even an offer with 0 interest. The biggest advantage to having a low interest rate credit card offer is that most of your payment is going towards the principal, and not the interest. Furthermore, these days, many credit seekers look for the ability to transfer a balance from another credit card offer with a higher interest rate. 0% introductory credit card offers often times have the ability for you to transfer a balance from another card. Should you pay your balance off withing the trial offer period you will save a lot of money on interest charges.
As every other credit card offer, low or zero interest card offers have disadvantages as well. For the most part, a 0% interest is only available for the introductory period. Once the introductory offer is over your rate will jump up to somewhere in between 10 and 19%, depending on the card offer as well as your credit history. Those with less than perfect credit will pay the higher rate once the trial offer is over. Furthermore, should you fail to pay your balance within the introductory offer period you will end up paying accrued interest based on your balance as well as the interest rate and the length of the loan.
