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What types of credit cards available and being used in the market today?

What types of credit cards available and being used in the market today?

 

Glossary

 

Subject to the different customer needs, the credit providers provide different types of credit cards. There are many types of credit cards, but there are 3 main types of creditcards, which are used globally.

Secured credit cards

 

These are credit cards, which the user has to deposit a collateral mostly in form of cash, before they can be able to use the credit facility. The value of the credit security deposited determines the amount of credit extended and the credit limits allowed. These credit cards have annual fees and are associated with high interest rates, due the high risk involved. People with bad or poor credit scores commonly use them. Normally, it would be very difficult for people with below average credit scores to acquire the normal standard credit cards.

Standard credit cards

 

These are the general use, unsecured credit cards. They are offered to any adult who have attained the necessary minimum credit criteria, including an acceptable credit score and the specific terms of the credit providers. They are used for the general purchase and payment of bills. The credit cards are revolving in natures, such that, you pay some pre-determined amount of money to the credit provider after regular time intervals. These credit cards do not require any type of credit security prior to use, and the credit limits are set by the credit provider. They are the most commonly used type of credit cards in the world.

Reward credit cards

 

These are credit cards, which are issued by the credit providers, so as to reward the clients for using the standard credit cards. The customers are able to earn and accumulate points and mileage from using their credit cards. Therefore, the higher the credit cards use, the higher the reward given. It is a tactic used by the credit providers to increase business by ensuring maximum use of credit extended. These rewards maybe in form of airline miles, cash back or points, which can be traded for merchandise at selected stores.

 

Specialty credit card is an example of other credit cards in the market, but the above are the main types of credit cards.

 

Each credit card has its own unique account credit card number on it. These numbers are just not allocated randomly, rather using a set criterion. The type of credit card can be determined using the first numeric value of the credit card number. Therefore, without even being told, you can ascertain the type of credit card by its credit card number. Credit card issuers allocate specific first numbers depending on the use of the credit card.

 

different types of credit cards

 

To start with, a credit card, which starts with 3, signifies a travel or entertainment credit card. These credit cards can be used to pay for recreational goods and services. A good example of an entertainment credit card is the American Express.

 

Secondly, a credit card starting with numeric value 4 is a visa credit card. This credit card type can be used to pay for purchases globally. They are readily acceptable by almost all goods and service providers.

 

Lastly but definitely not least, a credit card number, which starts with 5, is without any reasonable doubt a MasterCard.

 

reward type of credit cards

 

Thus, different credit cards start with different credit card numbers and this has highly enhanced credit card use. For instance, an entertainment card starting with 3 cannot be used to pay for anything, which is not directly or indirectly related to entertainment.

 

The existence of different types of credit cards hence, gives us the freedom to choose what credit cards to use, to well serve our different financial needs.