Credit Card And Its Existing Types

By Author: clearchoice clearchoice
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A credit card is a type of payment card, which is issued by a financial company. It allows the card holder to borrow funds at the point of sale. A revolving account is created by the card issuer who grants a line of credit to its customers from where they can borrow money. Certain interest is charged on cards and is used primarily for short term financing. The borrowing limits are pre set according to the user's credit rating, and the interest is charged after one month of purchase.


These days’ credit cards have come up as a boon. Now people need not worry to carry large sums of money in their pocket. Credit cards are accepted everywhere whether restaurants, hotels, departmental stores or malls. A credit card is linked to one’s bank account and enables him to make payments. As these cards are used in every field, so the risk factors associated with them have also increased. The risk may be the card lost or stolen and unauthorized accessed by a third party. Banks and other financial institutions are aware of this fact, so they have introduced secure credit cards that even if your card is stolen then one ...
... may not be able to access your bank account.


There are various Credit Cards Types available in the market based on different interest rates, fees and rewarding points. When you are applying for a credit card, it is important for you to know various types so that you can choose the best for yourself. Let us have a look on different credit cards available.


1) Standard Credit Card- one of the most commonly used a credit card. The money can be used up to a certain limit. The card holder needs to top up the amount whenever the balance goes down. Penalty charges are levied on the outstanding balance.

2) Premium Credit Card- certain Incentives are offered on these cards. The card holder enjoys reward points, travel incentives, cash back and other rewards. These cards are also known as Reward Credit Cards. Some of the examples are airlines frequent flier credit card, automobile manufacturers' rewards credit card and cash back credit card. The cards that fall under this category are Platinum, Gold, Visa and MasterCard.

3) Secured Credit Card- to obtain this card certain security deposit is required amounting to the credit limit. Usually people without credit history are offered these cards.

4) Limited Purpose Credit Card- this card is used for particular applications for establishing small credits like gas credits or departmental store credits. Minimum charges are levied on the card.

5) Charge Credit Card- The card holder is required to make full payment of balance monthly and thus it has no credit limit. As it offers spending flexibility, so the holder is expected to have high credit rating. Penalty is levied if the full payment of balance is not made on time.

6) Specialty Credit Card- these are especially used for business purposes to carry out business transactions in a convenient way.

7) Prepaid Credit Card- this is much like a debit card. The card holder needs to load the amount on the card and the transaction is not linked with his bank account.

So choose a card according to your requirement and start shopping without any risk of carrying money in your pocket.