Finding the right credit card can be a bit overwhelming. With so many providers, options, and fine print, it’s easy to get lost in the details. To make matters more challenging, not all credit card are created equally. Different cards serve different purposes. So, here are the most common types of cards to help you find the right one for your spending habits and goals.
Card for Big Purchases
Let’s say you’re planning for a big purchase such as a new home appliance or equipment, and you won’t be able to pay off your balance for at least a few months. In this case, you want a credit card with a low interest rate and no annual fees. That way, you can pay off big purchases without adding hundreds of dollars to the cost in the form of interest and fees.
Balance Transfer Card
Let’s say you have a substantial balance on a credit card with a high interest rate. The best way for you to pay off that balance quicker while potentially saving hundreds or thousands of dollars, is to open a balance transfer card. A balance transfer card allows you to shift your balance to a lower interest rate, which means more of your payments will be going towards the principal balance, as opposed to interest charges. When comparing balance transfer offers, be sure to check for balance transfer fees, which can charge anywhere from 3% to 5% of the transfer balance.
Rewards Cards
Let’s say you want to get rewarded for your everyday purchases. If you have a strong credit score, and you consistently payoff your balance, a reward card may be the right choice. You’ll have the decide what types of rewards are most important to you. If you travel frequency, a travel card that gives you points or miles may be the best option. Or, if you prefer to redeem your rewards for cash or merchandise, then look for a card that offers cash back. When comparing rewards cards, be sure to check for annual fees or minimum spending requirements.
Secured Cards
If you have poor or limited credit, or are just starting out, a secured credit card may be your best option. With a secured card, you put down an initial deposit (typically at least $200) and that deposit amount becomes your credit limit. As you use the secured card and payoff the balance, your positive payment history is reported to the credit bureaus, which helps to improve your credit rating. Secured credit cards are a great tool to establish or reestablish positive credit and can be a terrific introduction to the responsible use of credit cards.
Time to Compare
Now that you have a clear understanding of the main types of credit cards, you’re well-equipped to research your options and select the card that fits your financial goals. Remember that credit cards and the companies behind them can vary by terms, features, and service. If you’re seeking a card backed by a local partner you can trust and designed with your needs in mind, Vermont Federal Credit Union is here to help. Explore our options and let us assist you in finding a credit card solution you can rely on.
