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Your Credit Card: Why Compare and How?

26th January 2012

Since the first invention of credit cards by John Biggins in 1946, trading was revolutionized. Shopping for almost anything anywhere in the world is made easier, more convenient, and more secure. Even in trips, credit cards are a useful commodity in purchasing tickets. Made of plastic, these cards provide a mutual method of carrying out business transactions. With so many credit cards proliferating in the market, one could get confused on which credit card should be chosen.

How to Compare?

In as much as credit cards share similar advantages, they also differ in many ways. In deciding which card best suits one's needs, it is wise to make a comparison of different credit cards available today. To simplify the credit card comparison, cards vary according to their types, which include features, rewards and annual percentage rate.

Types of Credit Cards

Credit cards have one main purpose - to complete a transaction using the card as payment rather than using cash. Visa and MasterCard credit cards are accepted in almost all countries today. However, depending on the banks which issue the card, credit cards are classified according to their nature and unique features. They are the following:

Credit Cards with Rewards

The reward type of credit card allows cardholders to earn incentives through points accumulated per a pound charged on the card. Reward credit cards are further classified into the type of reward given to cardholders. There are seven main types of reward cards.

  • Hotel or Travel Points. Certain cards are co-branded with specific hotels. In this genre of cards, cardholders will earn rewards such as a free hotel accommodation. At times, they can upgrade their accommodation in a hotel cobranded with their credit card for free.
  • Air Miles. These cards are typically cobranded with a particular airline. You can convert the air miles you collect for free flights or upgrades.
  • Retail rewards. This card is co-branded with retailer shops. Most cards are cobranded with book stores, restaurants, clothing shops, and more.
  • Gas rewards with rebates or points. This card comes in two subclassifications- general and brand-specific. General cards allow cardholders to earn points from multiply gas companies, while brand-specific card is exclusive to a particular gas company.
  • Cash back. Cash back credit cards allow cardholders to earn cash rewards for making purchases with the cards.
  • Automobile manufacturer rewards. An automobile manufacturer reward card is ideal for an individual who has a plan to purchase a car in the future. The cardholder earns points which can be converted to a certain value deductible from the total amount of a certain brand of car.
  • General Rewards. The rewards can be anything that the bank may offer. They also vary in each month like gift certificates, complimentary hotel or resort accommodation, jewellery, and electronic gadgets, to name a few.

Standard Credit Cards

Standard credit cards are the most common. They are also available readily. Standard credit cards are further classified into:

  • Low interest. These cards simply offer a low interest rate on borrowing compared to most other credit cards.
  • Balance transfer. This feature allows cardholders to transfer their balance from one credit card with higher interest rate to another credit card with lower interest rate.
  • Purchase. These cards offer an introductory period where you will be charge 0% interest on purchases made using them.

Credit Repair or Bad Credit

For individuals with poor credit score, getting credit cards with better features and lower interest rates may be difficult. However, to help recover such bad credit score, individuals may opt for a credit repair card or card for bad credit.

Specialty Credit Cards

The specialty cards are customized for a specific group of individuals and their unique needs. This type of cards can be business credit cards or student credit cards. In the former, the card is exclusive for executives or business owners, while in the latter, the card is specific for students enrolled in a college or university.

Why Compare?

The principal purpose to compare credit cards is to save money. Some cards have a higher annual percentage rate and different surcharges rates than the others. In addition, the credit limit also varies. There are banks that impose hidden charges. Doubtless too, cards are limited and varied in features. Thus, it is best to know which features will be most useful to you.