Credit Cards

Payment solutions provider TSYS’s 2016 U.S. Consumer Payment Study revealed that, for the first time, credit cards jumped ahead of cash as a consumers’ preferred method of payment. Credit cards give shoppers flexibility by allowing them to purchase items today but pay for them later.

Credit card options include a variety of standard-issue, branded, student and prepaid cards. Cards also commonly offer various rewards, such as cash back, airline miles and other perks.

Credit Card Options & Rates

Credit cards are either secured or unsecured. Secured credit cards are funded by the cardholder ahead of time. These cards are ideal for individuals looking to better their credit score.

Unsecured credit cards are funded by the credit card company. Customers are given a specific credit limit based on their income-to-debt ratio and current credit score. See the latest Credit Card Rates here.

You can apply for the following types of credit cards:

Standard Credit Cards

Standard credit cards are issued by banks, credit unions, and credit card providers, such as Visa and MasterCard. Issuers offer a range of card options for people with different levels of creditworthiness, so review the credit card terms and interest rates offered before applying to see what rate your credit score might qualify you for if you are approved.

Specialty Credit Cards

You also can apply for a specialty credit card, such as:

  • Student Credit CardsStudent credit cards can help young adults build their credit. The cards often come with a higher interest rate due to the increased risk the bank or credit union is taking in issuing the card. Wise students — and their parents — will take full advantage of these cards and pay off the balance each month to qualify for lower-interest credit cards in the future.
  • Business Credit CardsBusiness credit cards allow cardholders to keep track of their business expenses to make tax time easier and allow for adding employees to the card account. You might even be able to earn free travel if the card is linked to a rewards program.
  • Gas Credit CardsGas cards typically provide either a discount on gas or cash back for the gas you purchased. Some companies, such as grocery retailers, partner with gas companies to offer gas discount rewards for your grocery shopping.

Credit Card Rates

One of the most important pieces of information you’ll need when selecting a credit card is its annual percentage rate. The Federal Reserve’s Consumer Credit Report listed the average APR across all credit card accounts as 13.08 percent at the end of August 2017.

You need to compare APRs — and other terms and conditions — before selecting a card. You might qualify for a credit card with a 0 percent introductory rate, or you might only qualify for one with a 24.49% APR that also imposes an astounding 30.99% penalty APR if you miss any payments. Aim for a getting card with the average rate or lower.

Apply for a New Credit Card

Retail Credit Cards

Retail-branded credit cards allow consumers to earn rewards for their loyalty to a specific company. Your card use might qualify for:

  • A percentage off your order or purchases in store
  • Free shipping on online orders
  • Points that can be redeemed for items or perks
  • Cash back
  • Exclusive offers

Although store credit cards typically come with higher interest rates than traditional credit cards, they otherwise function the same way.

Travel & Airline Cards

Travel and airline cards are co-branded cards offered in conjunction with a specific airline that offer rewards points or miles with that airline’s frequent flier program. These cards are designed specifically for people who travel frequently. In addition to offering rewards on every purchase, some travel cards will offer bonus reward points for purchases in certain categories, like booking flights and hotels through that airline’s website. Travel and airline cards frequently offer the highest dollar return for your spending, so if you’re a frequent traveler, they can be an excellent option for a rewards credit card. They can include travel-specific reward offers such as flight upgrades, exclusive member perks and points for future travel.

Balance Transfer Cards

Some credit cards offer introductory periods with low or even zero percent APR in an effort to attract customers who are currently carrying an existing balance on another card. By transferring your balance to these cards, you can get a respite from interest costs on your credit card debt for anywhere from six to 18 months. These cards will typically charge a three to five percent balance transfer fee, though, so consider your options carefully before making a choice.

Apply for a New Credit Card

Credit Card Rewards

Rewards are listed as the most attractive feature to cardholders in the TSYS 2016 U.S. Consumer Payment Study. The most common types of rewards give cash or perks to customers based on their spending behaviors.

Cash-Back Rewards

Cash-back rewards are designed to give you a fixed percentage back on your purchases. The cash will either be sent as a check at the end of the year or listed as a credit on your monthly credit card statement.

Points-Based Rewards

Points-based rewards credit cards assign a point value for each dollar you spend on various items, such as general purchases, gas and hotel stays. At the end of the month, you’ll be given the opportunity to redeem your accumulated points for merchandise, gift cards or travel.

Relationship Rewards

Some companies reward customers who use their credit cards at specified retailers or for the company’s related services. For example, some banks reward their credit card holders with discounts on home, auto and personal loans. Some retailers partner with credit card issuers to provide perks such as discounts or exclusive offers to customers who use their cards in their stores.

Apply for a New Credit Card

About the Author

Alicia Bodine is a New Jersey-based writer specializing in finance, travel, gardening and education. With more than 13 years of experience, her work has appeared in, Livestrong, eHow, USA TODAY, GlobalPost, and wiseGEEK.