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Whether you are a spender or a saver, there are now a mind boggling variety of credit card options from which you can make a selection. You will be spoilt for choice – from the bland vanilla credit cards that offer one or two months of interest free credit if you are lucky, to the fancy cards with a range of free gifts, discounts and cash backs.
Cash Back Cards
As the name suggests, you are refunded a percent of your monthly spending. This percentage varies anywhere between 0.5 to 2% and may be dependent upon factors such as your salary and the amount you spend every month.
Reward Credit Cards
Again, a suggestive name. Here, you get rewards or points if you make your purchases from a certain store or a catalog. Some retailers offer a staggered points system whereby you earn points each time you use your card, but receive an elevated number of points each time you spend with a 'recommended retailer'. You can also get rewards in the form of air miles or Nectar points. You may even get a discount on your next car if you opt for the correct rewards card.
Every time you swipe this card, a charity gets a small benefit. When you decide to sign up for a charity card, the credit card company are likely to make a small, initial donation to the charity, after which they will receive a donation relating to the percentage of your every spend. Although this sounds like a good option it is important to be aware that the amount donated per spend does tend to be minimal, 0.2% or so. However, charity cards do present a convenient way to give something back every time you shop.
Balance Transfer Cards
You can use these cards to shuffle your debt from your older card to a newer one for lesser or zero interest rates. Smart rate tarts are able to whittle down the balance transfer fee from 3% to a negligible figure.
Store cards are often given to shoppers who make frequent or large purchases in a certain store or are offered for promotional reasons. Such cards charge a substantial rate of interest, often up to 30% on outstanding balances. The smart shopper will use a store card for large purchases so as to benefit from any introductory discounts offered, pay off the full amount, and then retain the store card for sales previews, priority perks, and other advantages.
Prepaid Credit Cards
Such cards were born and have become popular because they were seen as a solution to reduce risks related to internet fraud and spiralling credit card debt. You first need to charge your prepaid card with the amount you wish to allocate for online or offline purchases and then top up your balances as and when you wish to make purchases. This prevents you from over spending and it discourages internet fraud because only a limited amount of balance is normally left on a prepaid card.
Status Value Cards
Platinum and Gold cards lend a certain status to the owner and are a reflection of your salary or your good credit score. They may not offer lower interest rates but do carry higher purchase protection as well as other benefits like a higher or unlimited credit limit.
For others, credit cards come in various shapes, sizes, colors, and an imaginative display of artwork. While such cards may cause a bit of confusion outside the UK, they are good fun to use everyday.