Which Credit Card is Right for You?

There are lots of credit cards out there to choose from, but how do you know which one is right for you? Here, we offer a breakdown of the types of cards available. Read through the descriptions to find the card type you should apply for.

Low interest credit cards

Credit card companies often get new customers by offering competitive low rates on credit cards. Low interest credit cards offer low rates of interest on new purchases, balance transfers, and sometimes the balance owing. It's very important to find out how long the low interest rate will last, though, before signing up. Often, these are simply introductory rates that shoot up after the first six or 12 months. Some people read only the larger, bold print and tend to neglect the smaller fine print on the application forms. Those who may have a bad credit rating but have three or four months of timely payment history may qualify for one of these cards.

Secured cards

Secured cards are, in reality, not actually credit cards. They are a form of "secured" debt, meaning that you must put up collateral in order to open one of these. With a secured card, you can only spend what you deposit into an account you open with the creditor. For instance, you may have to place $800 into a savings account with the creditor and in return you'll get a card with which you can charge up to $800. If you don't pay back the debt, the creditor could confiscate your savings account. Almost anyone who is able to deposit money into a secured card can qualify for one, so it is a great option for those wanting to build, or re-build a good credit score.

Cash back credit cards

These types of credit cards are generally given to those who have a good credit rating. Cash back cards have evolved and multiplied, giving the credit-savvy consumer a choice. Some cards offer an annual cash rebate that equals some percentage of the previous year's purchases. Others cards not only offer cash back, but other rewards as well like airline miles, gas rewards, investment products, and even charitable donations.

Reward point cards

An individual with a good credit rating can have the "pick of the crop" when it comes to selecting a card that offers reward points. These are similar to cash back cards except instead of receiving dollars, you get "points." Some people with lower credit scores may be able to obtain one of these cards, but may have to settle for higher interest rates or annual fees. You’ll have to decide if the rewards are worth the higher interest rate (in most cases, the answer is no). Some cards offer points for almost anything you purchase; the more you spend, the more you earn.

Airline credit cards

These cards are generally easier to obtain if you have a good credit score. They’re only useful, though, if you do a lot of traveling. These cards are not good for those who carry a balance from month to month, as the interest rates tend to be high. These cards offer a form of points or air miles that add up to free flights for card holders.

Student credit cards

There's a large selection of cards that are available to students. Some are secured cards and others are true credit (unsecured) cards. If it is a secured card, the student or parent can deposit money into the account and the student can use it to learn to manage credit. If it’s a conventional card, it may be tailor-made to suit the needs of various students. The better the credit rating a student has, the more selection he or she will be offered.