Credit Cards

In this day in age credit cards are almost a necessary evil. Almost every vendor takes them, it’s easy to use, it’s safer than cash, etc, etc. Credit cards are not to be confused with your Debit Card. A debit card is linked to a checking or savings account and withdraws money as it’s used. A credit card is an extension of credit. This is different than a personal loan as a credit card is a revolving line of credit, once it’s paid down it can be used back up.

Credit cards have become mainstream – we see them everywhere and use them daily. There are many types of credit cards to be aware of though as each different type of credit card offers different benefits.

  • General / Normal Credit Cards – This is the most common type of credit card. These credit cards are used for general purchases and are not associated with a store or brand. These types do not require a security deposit.
  • Co-branded cards – These are similar to general cards where they are accepted at most places but are affiliated with a company. Typically this affiliate offers discounts or rewards points with the vendor but can be used anywhere.
  • Secured Credit Cards – These are cards that require a security deposit before issuance. These are typically used to rebuild credit or begin building credit. Money is sent to the card issuer to secure the balance of the credit card.
  • Charge Card – this type of card requires that the charged balance be paid in full monthly.
  • Store Card – A store card is a type of credit card that is restricted to a particular store or family of stores. These may offer benefits like discounts with this store but they typically have higher interest rates and are restricted in use to only certain stores.

Credit cards are always good to have in case you get into a financial bind. However credit cards require discipline to ensure they’re not abused. Credit cards can have very positive and very negative impacts to your credit and credit score if not used properly. The lower the balance to limit ratio is with your credit cards the better the credit card looks on your credit report to lenders.  Remember having a good credit score will save you money in the long run with interest rates on loans and other lines of credit.