Think of credit cards as your friends, each with their own
unique personality, strong points and shortcomings. Some you’d
take to the pub, others you’d take on an expensive holiday. As
the saying goes: choose your friends carefully.

Standard credit cards

These are your regular credit cards – flexible friends to
get you out of a tight situation. With variable APRs,
they’re accepted at millions of locations worldwide.
Make sure you compare rates at Confused.com and shop
around to get the great deal.

Gold and platinum cards

Known as ’status cards’, they typically have higher credit
limits and are good to pull out if you’re trying to impress.

While they used to boast lower APR, these days it’s more about
the extras – travel insurance, cover for lost luggage or delayed
flights, hotel discounts, personal liability cover and medical
insurance are just some examples.

You generally need to be a high earner or have a decent credit
history to qualify for certain ’status cards’, although
it’s possible to be offered a Gold Card if you’re earning just
15,000 #. Some providers charge for the privilege of owning
a Gold or Platinum card. For more information, have a read of
Standard, gold, or platinum – What’s the point?

Balance transfer credit cards

A balance transfer credit card allows you to switch your debt
from a high-interest card to a low or zero interest card in
order to benefit from reduced monthly repayments.

You’ll benefit from a low or zero % APR for anywhere between six
months and five years. Although you’ll save money through
reduced payments, issuers usually make you pay a balance
transfer charge of between 1% and 3%, so make sure your savings
outweigh any fees.

If you make any new purchases on your credit card, these are
likely to accumulate at a standard interest rate until you’ve
paid off your low-interest balance transfer in full. This can
take some time, so it’s often worth using a separate credit card
that’s specifically designed for making new purchases.

Loyalty credit cards

A friendship that goes both ways – these are similar to store
cards except you can use them elsewhere too. Use your card at
the store, and you’ll be rewarded with discounts or vouchers.
Asda, M&S, John Lewis and Tesco all offer their own credit
cards. However, the value of these rewards is often derisory due
to their high interest rates.

Loyalty cards from British Airways, BMI or Lufthansa are much
better value. They also offer you airmiles every time you use
your card.

There are more and more football loyalty cards coming on the
market too. These give you discounts at the club shop and pay
money to your team every time you use your card.

Cashback Credit Cards

Cashback credit cards do exactly what they say – give you money
back. While the amount varies, you can often qualify for 5% cash
back on purchases for the first three months. This reverts to
between 0.5% and 1.5% on subsequent purchases.

However, just like the friend who lends you money but expects it
back with interest, if you’re not in the habit of paying your
credit card bill in full every month, the benefits of cash back
can be quickly outweighed by the interest rates you’re paying.
If you’re a timely payer, however, these can be excellent value.

Have a look at how Cashback credit cards reward their users.

Low-interest credit cards

These can be tempting, but once the honeymoon period is over,
there’s a price to pay. Low-interest credit cards offer a
seductive introductory rate of 0% on purchases for anywhere
between three months and one year. After that, expect to pay
around 15 or 16%.

Take advantage of low-interest cards to secure cheap credit on
expensive purchases such as a luxury hotel. But beware – canny
operators are known to take advantage of 0% deals for
’stoozing’ – cheaply borrowing money on your credit card
and investing it in a high interest account, yielding a quick
profit.

Charity donation cards

American Express made a lot of noise about their RED Credit
Card, which donates money to the fight against AIDS in Africa.
However there are many other charity cards out there doing the
same, whether it’s Help the Aged or Cancer Research.

But perhaps you’re best to follow in the footsteps of your
friend with a social conscience and go directly to the
organization in need. The amount these credit cards actually pay
to charities is often small.

About the author:

Author:  Mr Writer
Read more about ‘A Guide to the Different Types of Credit Cards‘ at
http://www.confused.com/credit-cards

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