Credit Card Types

With all the different kinds of credit features and benefits out there, choosing the right card for your needs can be time-consuming. Knowing and understanding the difference between these cards can help you make the right decision and get the most out of the card you choose.

• Regular Cards: Do not require a security deposit and have just a few features. Most regular cards have higher credit limits than secured cards but lower credit limits than premium cards. With credit cards, you can buy goods and services now and pay for them later—much later than with a check or debit card. That’s a big plus if you want to buy a big-ticket item (such as furniture or a computer) and you want to pay for it over time, even if it means interest charges.
• Smart Credit Cards: The latest in credit card technology, a smart card stores information on an integrated microprocessor chip rather than on the magnetic strip of a regular credit card. Although not yet widely available in the United States, these cards are thought by many to be the card of the future.
• Premium cards: These cards are commonly referred to as gold, platinum, or titanium. They offer higher credit limits and usually have extra features--for example, product warranties, travel insurance, or emergency services.
• Secured Cards: These cards require a security deposit. The larger the security deposit, the higher the credit limit. Secured cards are usually offered to people who have limited credit records--people who are just starting out or who have had trouble with credit in the past.
• Charge Cards: If you want complete control over your spending and want to settle your bill in full every month, then choose a Charge Card.. Charge Cards have no pre-set spending limit, but, remember, you will have to pay your bill in full each month or you may face additional fees and penalties.
• Affinity Card: A credit card that is associated with an organization, such as a university or professional association. In some cases, when you make charges on an affinity card, part of the service fee goes to the support of the associated organization.
• Supplementary Card--given to an "authorized-user" for a credit card account. A supplementary card gives your family members access to use your credit account. Despite their usage, you are still solely responsible for the account.

Alternatives to Traditional Credit Cards

• Prepaid Cards: One alternative to cash is a prepaid card, which works and looks like a debit card. Charges made with your prepaid card are debited directly from an account you established with a financial institution. There is usually no fee to use a prepaid card to make purchases or pay bills. But there may be fees to get a card.
• Stored-Value Cards: This type of card varies by issuer. In some cases cards are pre-loaded with a fixed amount of money that can then purchase goods and services up to the amount on the card. The card is automatically tracked until the balance value has been exhausted, at which time the card can be discarded. Other applications allow the cardholder to direct how much money to place on a card and "replenish" it as needed. Some cards also can serve as a debit card and allow cardholder access to automated teller machines (ATM).
• Credit Line Cards: While sounding like general-purpose credit cards, some 'credit line cards permit you to buy merchandise only from specialized catalogues. These card are normally marketed to people with less than perfect credit.
• Debit Cards: Not a credit card at all, this card allows you automatic access to funds in your bank or credit union account. Debit cards look like credit cards but work more like checks because the money is deducted directly from your checking or savings account. The consumer or merchant runs the card through a scanner that enables the bank or bank network to electronically verify that the funds are available and approve the transaction. Debit cards also have other features of a checking account, including overdraft protection (for a fee) and a monthly statement listing your use of the card.
• On-line Debit Card: Commonly known as an ATM card. Transactions made with an on-line card are posted and withdrawn from your bank account immediately or within the same day. Your PIN number is required to authorize an on-line purchase.
• Off-line Debit Card: Referred to as a "check" card. Transactions made with an off-line card take one to three days to be posted and for funds to be withdrawn. Your signature is required on the printed receipt every time you perform an off-line debit transaction.

For detail information or to learn more about choosing and using credit cards, please visit our credit card education section.

Back to How to Shop for a Credit Card