Do you feel as though you’re drowning in a sea of credit cards? There are dozens of “special offers,” rates and rewards programs available. It can be hard to determine which type is best for you. To make things easier, let’s break the types down into basic categories so that we can get a better idea of what’s on offer.
This blog will discuss different types of credit cards and their features, from basic cards through to higher tier products such as travel reward cards and cash back options. Knowing your way around the various card offerings should help simplify yet another key financial decision.
Overview of the Different Types of Credit Cards Available
When it comes to credit cards, there are a wide variety of options available to consumers. Some cards offer rewards programs, where users can earn points or cash back for their purchases. Others may have lower interest rates or introductory offers for balance transfers. Secured credit cards require a deposit upfront, while prepaid cards allow users to load funds onto the card and spend only what they have available. There are also specialty cards, such as those for business or travel. Choosing the right credit card can make a significant impact on your financial health, so it’s important to do your research and find the right fit for your specific needs.
Rewards Credit Cards and Why They Are Beneficial
Rewards credit cards can be a great way to save money and earn rewards for your everyday purchases. By using a rewards credit card, you can earn cash back or rewards points that can be redeemed for statement credits, gift cards, travel, merchandise, or other rewards. Many rewards credit cards offer sign-up bonuses to new cardholders, which can be substantial and help you earn rewards quickly. If you travel frequently, there are also rewards credit cards designed specifically for travelers that offer travel benefits such as airline miles, hotel points, airport lounge access, and travel insurance. Many rewards credit cards also provide purchase protection, which can help protect you against fraudulent purchases or damage to your purchases. Overall, rewards credit cards can be a beneficial tool for managing your finances and earning rewards for your spending.
Cash back Credit Cards and How to Maximize Their Benefits
Cash back credit cards are a type of rewards credit card that offer cash back for purchases made with the card. Cashback rewards typically range from 1-5% of the purchase amount, and some cards may offer higher cashback rates for specific categories such as gas, groceries, or dining.
To maximize the benefits of a cash back credit card, it’s important to choose a card that fits your spending habits and offers cashback rewards in categories that you frequently spend in. For example, if you frequently dine out, you may want to choose a card that offers higher cashback rewards for restaurant purchases.
It’s also important to use the card for all eligible purchases, as the more you spend, the more cashback rewards you’ll earn. However, it’s important to avoid overspending and carrying a balance on the card, as interest charges can quickly eat into any cashback rewards earned.
Low-interest Rate Credit Cards and How They Can Help You Manage Finances
Low-interest rate credit cards are a type of credit card that offers a lower interest rate than traditional credit cards. These cards can be helpful for managing finances as they can help reduce the amount of interest charged on payable balances, which can save you money in the long run.
If you carry huge balance on a credit card, a low-interest rate card can be a good option as it can help you pay off the balance more quickly and with less interest charges. This can help you avoid getting stuck in a cycle of debt and paying high interest charges on your credit card balance.
Low interest rate credit cards can also be helpful for managing unexpected expenses or emergencies. If you don’t have enough savings to cover a sudden expense, using a low-interest rate credit card can be a more affordable option than taking out a high-interest loan or using a credit card with a higher interest rate.
Some low-interest rate credit cards may offer other benefits such as cashback rewards or other perks. It’s important to compare different cards and choose one that offers the best combination of benefits and low-interest rates.
Balance Transfer Credit Card and How It Can Be Used for Debt Consolidation
A balance transfer credit card is a type of credit card that allows you to transfer an existing balance from one or more credit cards to the new card. Balance transfer credit cards often offer a low or 0% interest rate for a promotional period, typically ranging from 6 to 18 months.
Balance transfer credit cards can be a useful tool for debt consolidation as they can help you consolidate multiple credit card balances into one account with a lower interest rate. By consolidating your debt onto one card with a lower interest rate, you can save money on interest charges and potentially pay off your debt more quickly.
To use a balance transfer credit card for debt consolidation, you’ll need to transfer your existing balances to the new card. Typically, there is a fee for balance transfers, typically ranging from 3-5% of the transferred balance. However, some balance transfer credit cards may offer promotional deals with no or reduced balance transfer fees.
Once you’ve transferred your balances, it is crucial to create a plan to pay off the balance before the promotional period ends and the interest rate goes up. This may involve making larger payments than the minimum required payment, or setting up automatic payments to ensure you don’t miss a payment.
Credit Cards for Students and Their Exclusive Features
Credit cards for students are designed specifically for college students who are new to credit and may have limited or no credit history. These cards typically have lower credit limits and may offer special features and benefits that are tailored to students’ needs.
Some exclusive features of credit cards for students include:
No annual fees: Many student credit cards have no annual fees, which can be helpful for students on a tight budget who want to build their credit without incurring additional costs.
Low interest rates: Student credit cards may offer lower interest rates than traditional credit cards, which can help students avoid high interest charges if they carry a balance on the card.
Rewards and cash back: Some student credit cards offer rewards or cash back for purchases made with the card. These rewards can be redeemed for statement credits, gift cards, or other rewards and can help students save money on their purchases.
Credit-building tools: Some student credit cards offer credit-building tools such as free credit score monitoring or alerts to help students track their credit history and improve their credit score.
Fraud protection: Many student credit cards offer fraud protection features such as zero liability for unauthorized purchases, which can help protect students from fraudulent activity on their accounts.
Student credit cards can be a helpful tool for building credit and managing finances while in college. However, it’s important for students to use these cards responsibly, pay off balances in full and on time, and avoid overspending to avoid accumulating debt.
Final Thoughts
There are many different types of credit cards available, each with their own unique features and benefits. When choosing a credit card, it’s important to consider your spending habits, credit history, and financial goals to find the card that best fits your needs. Furthermore, it’s important to use credit cards responsibly, avoid overspending, and pay off balances in full and on time to avoid accumulating debt and damaging your credit score. If you are unable to choose the right credit card, using services like Credit Card Compare NZ could be a great option to apply for a card that resonates with your individual needs.
For more information and tips to help you choose the best credit card in NZ, visit our website Credit Cards Compare.
