With thousands of credit cards in the market, choosing a credit card could be challenging as some types are more beneficial to you than others. Understanding options is key to narrow down the choices. Here are some of the most popular credit card types.
As the name indicates these types offers rewards on the purchases you make with your credit card. When you use a rewards card to make purchases, you accumulate credits in proportion to the amount you spend. Rewards include cash backs, points, travel miles and other.
• Cash back: is a benefit that refunds the cardholder a small percentage of each purchase made with the card. It typically ranges from 1-3%
• Miles: is a type of loyalty benefit that certain credit cards give to customers as a reward for their credit card spending. For example, you benefit 1 mile for every $1 you spend on your credit card and when accumulated you can use them to book flights on any airline.
• Points: is a type of benefit that falls between cash back and miles, for example with each purchase you make points that you can redeem for merchandise, cash back, travel and other rewards.
A credit builder card is a credit card that’s specifically designed for people with poor credit scores. A client with bad credit is considered a risky borrower. Bad credit can reduce your chances of getting finance for certain things like loans, mortgages and rentals. Popular credit building card include:
• Student credit cards: This type of credit cards tend to have lower spending limits than standard credit cards and will often charge a higher interest rate on the money the students borrow. The perks of these cards are that you can establish and build credit. This credit card is the first step for students to build credits and show that they can handle payments and are trustworthy in the context of credits.
• Secured credit cards: This type of credit cards require a refundable deposit. After providing the deposit, a secured card works just like a traditional credit card. The secured credit cards encourage healthy credit habits and boost credit score.
Low interest credit cards are credit cards with a low Annual Percentage Rate (APR). An annual percentage rate (APR) is the interest rate you pay each year on a credit card. They offer lower rates than the average credit card with rates ranging from 10 to 20%. Someone who doesn’t plan on paying their credit card bill in full every month can benefit a lot from these types of cards as it can save him a great amount of money.
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