All the Types of Credit Cards & How They Work
Credit cards are a significant part of how we purchase goods and services in the United States. They provide an easy way to pay for items without having cash on hand, which is especially useful when traveling or shopping online where you might not have access to your bank account or wish to carry cash.
What Types of Credit Cards and Payment Cards are Available?
Let’s take a deeper look at the characteristics of each of these cards and how to figure out which are best for you right now.
Secured Credit Cards
A secured credit card is a type of credit card that requires you to put down an upfront cash deposit, usually equaling the amount of your credit limit.
How Does a Secured Credit Card Work?
Often, secured credit cards work as the first step for young adults or people who don’t have an established credit history to have access to credit. They also work for consumers with poor credit.
Unsecured Credit Cards
This type of card has a higher risk to lenders because they rely on your credit history and your ability to repay. Because you make charges against a line of credit on an unsecured card, they often get referred to as “charge cards.”
How do Unsecured Credit Cards Work?
Unsecured credit cards represent a standard financial product available through banks, credit unions and other service providers.
Balance Transfer Credit Card
Balance transfer cards allow you to transfer your high-interest credit card debt to a card with a low introductory annual percentage rate (APR). Sometimes the APR is even 0%, meaning the card user might be able to pay off credit card debt interest-free.
SWIPE UP FOR MORE ABOUT All the Types of Credit Cards & How They Work