Credit Card Types and Uses

A credit card is a way of making purchase, where, a user is issued a plastic card, which acts as a substitute for cash payments. The issuer of the card is usually a financial institution like a bank, which grants a line of credit to the user, so that the user can make payments for his purchase, or withdraw money in the form of cash withdrawals. This amount is later paid back to the lending institution, by the user.

A credit card is therefore, a plastic card, which entitles the user, to buy goods and services, on the basis of the holders promise to pay for these goods and services. The basic difference between a credit card and a debit card is that, in a credit card, the user buys goods and services on credit, whereas in case of debit cards, he buys them on the basis of the money deposited in his savings account.

You can choose from a number of cards. Ever since the credit cards came into existence, they have undergone many changes. Several types of credit cards evolved in due course. The following are some of the types of credit cards, which you can opt for:

1. Traditional credit cards
Traditional credit cards were basically offered by department or chain stores, gasoline companies, airlines, banks, credit unions and other lenders. Some of them were eligible for use at only one retailer while others were eligible for use at many retailers.

2. Prestige cards
Prestige cards like silver, gold and platinum cards have higher credit limits, as well as higher annual fees than traditional credit cards. Many of them offer perks such as emergency medical and legal services, collision damage waiver insurance for car rentals etc. As it is, one can opt for one or more of these cards, depending upon your requirements.

3. Affinity cards
Affinity cards are usually linked to charitable organizations. As it is, in these types of cards, a part of the annual fee or yearly charges, (or a fixed amount per transaction) is donated to the sponsoring organization.

4. Reward cards
With the competition going tough, more and more credit cards companies began to offer wonderful perks to attract more and more clients. Reward cards were a big name in this regard. These cards offer perks such as cash rebates, frequent-flier miles, discounts on goods and services, interest-rate reductions, and many other incentives. One thing, which you should always keep in mind, while choosing a card with rewards, is that, you should make sure that the rewards are for products, which you use. Also, make sure, to read the terms and conditions properly, to know about the annual fee or a limit on the amount of the reward earned annually.

Apart from the above card types, there are also, secured cards, smart cards, prepaid disposable single purpose cards, reloadable cards etc. You can choose from any of these options, the card, which suits your requirements.