Different Types Of Credit And Debit Cards

Today it seems like almost everyone wants a credit card, especially teenagers and people in their 20s or 30s.

In fact, as soon as teenagers do reach the legal age to own a credit card, there is a good chance they will get one immediately, and the banks are more than happy to give them one.

Today credit cards are a way of life, and providing you can use one responsibly, they are definitely worth getting.

However, it is important to remember that there are lots of different types of credit and debit cards available to choose from, and depending on your needs, one type may suit you better than another.

Below you will find a list of the different types of credit and debit cards, and a little bit of information about them.

Business Credit Cards

Business credit cards are meant for business owners, directors and business executives.

Due to the nature of the owner, this type of credit card usually comes with a high credit limit and you have to be a business owner to receive one or be given one by your company.

Student Credit Cards

Student credit cards are usually the first type of credit card that teenagers get. Because students don’t have a credit history yet, this type of credit card normally comes with a low credit limit.

Student credit cards also tend to look different than regular cards, as this makes them more attractive to younger people who see them as a fashion accessory.

Over time as you use the card more and are able show that you can repay the money you spend, your credit limit will be increased.

Prepaid Credit Cards / Debit Cards

Prepaid credit cards are ideal for those who do not like the idea of having money to spend on credit. They involve you putting money onto the card first, and then only being allowed to spend how much money is on the card.

In this sense, a prepaid credit card is not really a credit card, as you are not borrowing money on credit but rather spending money that you already have. A more appropriate name for this type of card is a debit card.

Why do people choose to get a prepaid credit card/debit card? There are several reasons, although the main reason is because it is far more convenient than having to carry around lots of cash with you.

People who have had bad experiences in the past with credit cards and got themselves into debt, may also prefer to use prepaid credit cards to avoid similar problems happening to them in the future.

As a result, this type of credit card tends to be popular with people who have a bad credit history or a bad credit score, as they are easy to get approval for.

Balance Credit Cards

Balance credit cards are non-secured cards which allow you to save money in interest charges by transferring a higher interest credit card balance onto a lower interest rate credit card.

Low Interest Credit Cards

Low interest credit cards are another type of non-secured card. Usually these cards will offer an introductory low APR that will change to a higher rate after a certain period of time.

The advantage of using this type of credit card is that you could buy what you wanted with the low APR and then pay it off several months later.

Although this is not really what you should be aiming for, as it is always good practice to pay your credit card debts in full and on time every month.

Air Mile Credit Cards

Air mile credit cards are designed for frequent flyers, and as such, offer air miles for each flight you book on your credit card. These air miles can be saved up and later exchanged for free flight tickets.

This type of card is ideal for people who fly a lot, as you may as well get something extra back if you are going to be paying for your flights on a credit card anyway.

Cashback Credit Cards

Certain credit cards will give you a percentage in cashback every time you spend money on your card.

Although this rate isn’t very much, you might as well get a credit card which gives you cashback than one which doesn’t.

ATM Cards

ATM cards are what you are likely to first receive when you open up a bank account. This type of card allows you to withdraw money, make cash deposits and transfer money between accounts.

Usually an ATM card will not allow you to get overdrawn, so it will not have a credit limit. However, some ATM cards do, and they will allow you to get overdrawn.

What Type Of Credit Or Debit Card Will You Get?

As you can see, there are lots of different types of credit and debit cards to choose from. Whatever credit or debit card you end up getting, it is important that you use it responsibly.

It is very easy for example to get yourself into debt if you have a credit card, because it seems as though you suddenly have a lot of extra money to spend. Don’t fall into this trap!

You will have to repay it eventually, so it’s always best to repay your balance in full and on time every month to avoid getting fined for late payments, or having to repay what you owe at a high rate of interest.

If you are at all concerned about whether you will be able to use a credit card responsibly, try using a debit card first and see how you get on with that. If you can manage a debit card, then you can move up to a credit card.