We’ve often been told that credit cards are bad – that they can lead the unwary into debt and other financial woes. But what many people lack is an understanding of the different types of credit cards available and what each one can be used for.
In this guide, we’re going to take a look at five of the best credit cards, exploring the perks they bring and how they could be used to your advantage.
Credit-builder credit card
If you’re looking to borrow money or take out a mortgage, chances are you’re going to need a decent credit score.
When finances turn sour, sometimes our credit score goes too. It’s important to remember, however, that a low score can be turned into a high one. And one of the best ways to do so is by using a credit-builder card.
Usually, the bank or card issuer sets you a low credit limit. You use your card to make small purchases, paying them off in full and on time at the end of each month.
Do this consistently for around six months and you’ll prove that you’re a responsible and trustworthy borrower, and you’ll see your credit score rise.
Rewards credit card
Rewards credit cards are one of the best ways to get some money back on your purchases. The rewards offered by issuers can vary, but most will apply to everyday purchases.
They may come in the form of vouchers, reward points, air miles or cashback. Some schemes even offer exclusive access to deals and events.
It all depends on what you use your credit card for. If you travel a lot, getting some free air miles would be handy. And if you use your card to make lots of everyday purchases, building up some big cashback rewards would be useful too.
One of the leading types of reward credit cards is Discover. They offer a range of perks for regular card use as well as a great deal of flexibility in how you can use their cards. One example is making deposits in online casinos. You can check out the best Discover casinos here.
Cashback credit card
Who doesn’t want free money?
The idea behind cashback rewards with credit cards is simple – if you choose to buy something using your card, you’ll accrue a cashback award. You literally get a cash payment.
Some credit cards offer different types of rewards for different purchases. For example, some rewards may be tied to specific shops or chains.
The level of reward can vary too. Some issuers offer a fixed percentage of your spending back in cash. It’s worth doing your research to see which card offers the most cash back.
Also, consider how you use your card. Some issuers reward everyday purchases, whereas others are more specialized.
Be careful not to lose your cashback rewards, though. If you fail to pay your balance off in time or in full, it could be wiped out in fees.
Travel credit card
When travelling abroad, one of the biggest inconveniences is changing currency. If you’re lucky, you may live and travel within the EU, which enjoys the shared currency of the euro. And around the world, many countries accept US dollars.
But many of us have to convert our cash into the local currency of our destination before we go away. We may get charged a commission for doing this, costing us even more. And then we run the risk of losing that wad of cash on our travels.
To solve this problem, a number of banks and credit card companies offer travel cards. This means that you can use your credit card in foreign countries. The bank automatically converts the currency for you, meaning there’s no need to convert all of your travel money before you go away and risk losing it on your trip.
Purchase credit card
Purchase credit cards are ideal for shoppers. Usually, they allow you to make purchases and spread the cost over a period of time.
The catch is that you pay interest on the outstanding amount, but you can get deals that offer interest-free periods. These could be one month, three months, six months or even a year.
This type of credit card is ideal if you’re making a big purchase like a car or if you’re making property renovations and want to spread out the cost without accruing interest. Just be sure to pay off the balance in time!
