Credit cards – which one?

17/12/2009

Credit cards – which one?

When credit cards were first issued and were a new concept, you did not have many choices as to which one you should choose. Nowadays, there are so many different types of credit card available, that it can be confusing knowing which one is best for your own individual circumstances.

Let’s look at just some of the different types of ‘plastic’ that are within the marketplace now:

•    Cashback credit cards – you spend on your card and get a percentage back
•    Charity credit cards  - when you take out the card and, often, when you spend on it, a percentage goes to your chosen charity
•    0% interest cards – cards where you pay no interest on purchases and sometimes balance transfers too, for a set period of time
•    Balance transfer – cards where you transfer the balance from one credit card to another, often at a lower rate of interest
•    Low interest rate credit cards – credit cards that offer low interest rates for a set period of time
•    Reward cards – you get rewards for using your card, such as air miles or something else 
•    Credit cards for people with a poor credit history – specialist credit cards for people who have experienced financial difficulty in the past. These often have a higher than average rate of interest on these to reflect the perceived risk involved
•    Prepaid credit cards – cards where you put on money on to them before you spend. This stops you running up a debt
•    Student credit cards - cards aimed at students. These may offer added incentives.

Choosing the right card

As you can see, there are many cards available. Choosing the right one will depend on your spending habits and whether you want to take advantage of some of the benefits of a particular style of card (eg if you have a lot of holidays, one that offers air miles may suit you).
Using a credit card comparison service may help you narrow down your options. These services often allow you to search for credit cards by ‘style’ and you can then compare the individual features and product benefits. That way you can make an informed decision as to what card will best suit you.

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