What is a credit card? A credit card is a card that’s associated with a financial institution. It allows you to make purchases up to your agreed credit limit. Depending on your credit card limit, you can purchase something as little as your lunch, or something big – like a flight halfway around the world!
Credit cards are great payment tools when used responsibly. While we don’t recommend using credit cards as a borrowing tool, they can be a rewarding payment tool used to collect rewards and travel points.
What are the different types of credit cards? There are many different credit cards to choose from. The most common credit cards are:
Rewards Credit Cards A rewards credit card lets you earn rewards on your purchases. Some cards will pay a flat rate and others will give bonuses in different spending categories.
Secured Credit Cards Secured credit cards are meant for credit builders. This type of card requires you to put “collateral” on your credit card, usually the amount or more that’s on your card. This is a way for people to build credit and eventually move to an unsecured card.
Cash-Back Cards A cash-back credit card lets you earn money back on every purchase you make. These benefits provide you with the opportunity to choose from taking the cash or using the “points” for purchases.
Low Interest Cards Low-interest rate (low APR) credit cards are best for people who carry some credit card debt month over month. Low-interest credit cards can make it easier to pay off debt. However, if you find you’re not able to pay off your full balance each month – a fixed-rate installment loan to pay off credit card debt can save you money on interest.
Balance Transfer Cards Balance transfer cards are for people who have credit card debt. A balance transfer is where part or all of your debt is transferred from one card to another. This saves on interest payments because they offer a 0% interest period, typically for the first six months.
How do I choose a credit card? Check your free credit score and we’ll recommend the best credit card suited to your profile.