Getting mail was exciting when you were a kid because it was usually something fun like a present or an invitation. And as an adult, sometimes it probably feels like you got accepted to Hogwarts when you open your mailbox, so many letters fly out. The child inside you gets excited but soon you realize they’re all emblazoned with the Bank of America, Discover, or Citi emblem, not the Hogwarts seal. As a grown up, sometimes it seems like the only people who send mail anymore are the multitude of banks vying for your application for a new credit card account and the occasional magazine company that really, really misses you. When your junk mail reaches the point of utter chaos, it can be so overwhelming that you end up throwing it all away or making a hasty, uninformed decision when you need new credit.
But don’t let the inundation of information overwhelm you, nor the disappointment that you still are not a wizard in training. Whether you’re a first time borrower or a seasoned veteran at getting late notices, it’s a good idea to compare what’s out there to select the best credit card for your needs.
Below is an overview the basic types of credit cards you can choose from based on the benefits each one offers.
Low Interest: The focus of a low interest card is to make it easier to carry a balance from one month to the next without having to make continuous balance transfers or open new lines of credit. A lower interest rate will result in lower fees each month while you pay off your card or accrue new debt that you plan to pay off later. The interest rate on these cards sometimes increases after a promotional period, which makes them useful for balance transfers or short term hardships.
Balance Transfer: Balance transfer cards can help you pay down a credit balance that you have been carrying. Many balance transfer cards have a promotional period during which the interest is at zero or low percentage rate. Balance transfer cards are popular for people who want to consolidate their debt in order to make their payments easier or lower, as well as people who have one credit card with a high balance and a high interest rate. With balance transfer cards, there is usually a one-time balance transfer fee added to the total balance.
Cash Back: Cash back cards give you cash in return for making purchases on your credit card and paying off the balance. Cash back cards reward people who are dedicated to paying off their balance each month and the reward can go toward the balance itself or be redeemed in a checking account or a check. Cash back cards often offer special promotions with particular restaurants or retailers, as well as higher cash back percentages in certain categories. Cash back cards are popular for people who like to charge most things on a credit card, but are good at paying off the balance each month.
Rewards Points: Points cards are similar to cash back cards, except the account holder get points in return for purchases instead of cash. The points can usually be used toward purchases through an exclusive shopping site for cardholders or converted to payments on your credit balance. Some points can be converted to cash. Some points cards offer hotel or airline rewards points, which often offer bonuses for purchasing travel during various times or give a large amount of points to new card holders. Points can be used for free airline tickets or even free hotel stays.
Whether you’re an avid traveler, a lover of saving money, or a fan of getting rewarded for your diligence, you have choices that will suit your spending style and your financial needs. Most banks offer multiple cards, so it may be a good idea to choose the card type that fits your lifestyle first, then compare each bank’s offerings to choose one that makes sense for your financial goals.