Suppose you have a money shortage but want to purchase something badly. Then this card, the credit card, works as a savior. Yes, credit cards have many benefits and are useful if you know how to use them.
What Is A Credit Card?
Simply, it’s a thin rectangular piece of plastic or metal card issued by a bank or any authorized financial service provider that allows cardholders to borrow money. Not only purchase with these cards, but merchants can also accept payments.
Remember one thing; cardholders must pay back the borrowed money and an applicable interest rate. You can use these cards through bank tellers and ATMs. Cardholders get a borrowing limit based on their credit rating.
Nowadays, most businesses use credit cards as their transaction payment method.
Types Of Credit Cards
You may already have heard the name of a few major credit cards like MasterCard, Visa, Discover, and American Express. Credit unions, banks, or other financial institutions issue these.
There are several types of credit cards you can choose as per your niche.
- Reward Credit Cards – This type of credit card offers points or cash back to their customers based on the percentage of spending on groceries, dining out, gas, etc.
- Cash Back Credit Cards – It’s wonderful that you purchase something without your credit card and get cashback.
- Travel Credit Cards – This credit card is for you if you love traveling. It offers the opportunity to earn rewards points through traveling. You can earn flexible travel points that you can use or transfer to hotel or airline programs.
- Business Credit Cards – Cardholders can keep their business and personal expenses separate using this type of credit card. The most interesting part is it can be a cash-back credit card, a travel credit card, or a secured and rewards card.
- Student Credit Cards – This card is also known as a starter credit card that is designed and generated, especially for students or young people with a limited credit history. Most student credit cards don’t have any annual fees and offer good rewards and bonuses.
Apart from that, you will have Store Credit Cards, Secured Credit Cards, and Co-Branded Credit Cards.
Building Credit History With Credit Cards
Credit cards became a trusted payment method that eliminated the carry of liquid cash. When you start using credit cards, it will help you to build a positive credit history. Once you can create strong credit scores through your online purchase and transactions. You will get good benefits from it.
Responsible and regular purchases and paying the loan back on time will increase your credit score and make you a valuable and attractive consumer to other lenders.
How Do I Get A Credit Card If I Don’t Have Any Credit?
If you don’t have a credit card, you need to open a secured one. It is the simplest way to start. If your spending and repayment habits are good enough, then it will increase your credit score. That will make you a proven borrower to the lenders.
Another way is to be an authorized user of an established account of your parents or spouse. The cardholder’s credit history will appear on your account, which will greatly impact your credit report.
But make sure that person must have a good credit score because s/he has a poor financial history. Then it will also reflect on you.
Final Words
Credit cards are a great source of transactions and payment methods, too, if you use them correctly. Make sure to learn all the terms and conditions, charges, interests, and bounce rates so that you won’t fail any issues later. Your good repayment history will enhance your credit score and make you trustworthy.
