What Is The Right Credit Card Type For You?

Have you ever wondered what is the best choice of a credit card for your needs?

Cards are a convenient replacement for cash and checks. Currently, there are in use multiple types of cards and choosing the one that is right for your needs and lifestyle can be tricky. Every bank has an extensive assortment, each carrying enchanting rewards programs or promising no fees. Even airlines, hotels or Disneyland have their cards, so deciding can be complicated.

Credit Card or Debit Card?

The first choice you have to make is between debit or credit cards. Debit cards attached to your checking account only allow you to spend what you already have in the bank. Think of them as a cash replacement. These cards do not require any qualification other than to have an account with the issuing bank and don’t impact your credit score, as you spend the money you already have.

On the other hand, a credit card is only issued to people with good credit scores, or those willing to pay high fees and rates. The credit card always has a spending limit and is a short-term loan that you take from the bank. You repay, and this cycle grants you the right to another loan. This continuous borrowing is called revolving credit since you do not have several installments and your debt is gone. Instead, you strive to keep debt within acceptable limits indefinitely.

Depending on your current situation, including credit score, other loans, and debts as well as your financial needs and long-term goals, there are multiple variants.

No History or Low Credit Scores

Students, people who did not own a credit card before or those who had a difficult time managing their finances should look at one of the following categories. The downside of these cards is that their issuing authorities require higher rates.

Student credit cards

It is safe to assume that in the future credit scores will still be used to assess a person’s relationship with own and borrowed money. However, to get a good credit score, you need a history of being a diligent payer. You can apply to get your card as young as 18 or 21 and use it responsibly, to show the bank you know how to play this game.

It would make business sense to take risk premium and ask high commissions, but that would make young people, especially students shy away from these financial products. Therefore, banks are taking the mid-route and creating student credit cards with an APR of 9-24%, sometimes balanced by an annual fee. Some of these even offer rewards or bonus points.

Secured credit cards

If you have a bad reputation in the world of lending, this could be a useful tool to prove you have learned your lesson. A secured card requires an initial deposit from your part and repaying your debts on time, remaining below the credit limit. This behavior goes on your personal record. After one year, you can see a notable improvement on your FICO score. At that moment, you can apply for unsecured cards with lower APRs.

Most initial deposits should be at least what you aim to get as your credit limit and can increase as the lender gets more confidence in you. As these products tend to have a high APR (over 20%), these are only temporary solutions.

Prepaid credit cards

Prepaid credit cards are an intermediary product between a credit card and a debit card. They only allow you to spend a predetermined amount already loaded on them. The main difference between prepaid credit and debit cards is that you can build a credit score, within your means.  The best part remains that you do not need any documents to qualify for such a card and it can jump-start your journey to a better FICO score.

Subprime credit cards

The desperate man’s option these are the cards that anyone should stay away from. You can spot such an offer by looking at the APR, which usually floats around 30%. If the APR is not evident, just look at the amount of marketing surrounding these products. However, you should be cautious with offers that sound too good to be true, including something like $400 for free. In fact, this is a year’s worth of monthly fees, that you will have to repay.

A subprime credit card should always be avoided. As a last resort, replace it for a limited amount of time with a secured card to enhance the score.

Good credit scores

Having a good credit score gives you the right to choose a credit card for the benefits it offers instead of just having one for the necessity. Since their introduction in the 50’s, credit cards have evolved into elaborate retail partnerships. Current options are tailor-made for shoppers, travelers or even big spenders. When selecting a plastic, be sure to analyze pros and cons. Especially when it comes to rewards and bonus points be sure to evaluate your need for such programs and your ability to enjoy them in the given time, as all these are subject to restrictions.

Standard credit cards

The basic version of the credit card, no rewards, no fees, just the APR. For clients with excellent credit scores, this is a reliable and straightforward option. You can leverage your FICO score to your advantage asking for the lowest possible rate from each provider and even negotiate if you think you can do better. Just pay your charges by the end of the month and don’t go anywhere near the limit.

Balance transfer cards

A balance transfer card has a low-interest rate for a promotional period, no less than six months. If you are looking to eliminate some of your debt you can get a balance transfer card with a low rate in the first 6-18 months to help you cover some of the debt at a low cost. The key here is to have an amount of debt that you will eliminate before the promotion is over.

Rewards cards

If you thrive of gamification strategies, you can have a rewards card. Get points, miles, loyalty or cash-backs. These types of cards are aimed at financially secure individuals who also happen to have a hobby or interest. Most rewards cards are a partnership between a lending institution and a large-scale retailer to inflict more spending.

Here, you have to find a delicate balance between APR, annual fees, the attractivity of the rewards and long-term benefits. Frequent travelers might go for their favorite airline or hotel chain, while moms or dads could sign-up for a Disney-themed card.

Black cards

The upper limit is represented by exclusive black cards. These are the tools of a financial elite, joining the club requires an invitation. Sometimes these cards have no spending limit. Most likely, clients of these do not worry about credit scores anymore. Some black cards replace top benefits offered by rewards cards and designate a VIP membership. Concierge, business lounge and business class seats for each flight are minor benefits that come with such a tool.


Credit cards help you manage your finances every month. Even more, the payment history attaches a risk factor to you. It tells the financial institution what type of client you would be.

The lack of financial education or an impulsive shopping behavior can damage a person’s credit scores. This usually leaves them with little options regarding financing sources. However, regardless of your current situation, there are options out there, and you do not have to select the one that will put you in more debt.

The most important part is to pick the credit card that is fit for your needs, gives you the best APR and could even throw in a few perks and bonuses. If you are in the lower range of the FICO, focus on getting your score up and making your payments on time. The mid-range clients should aim for the lowest APR. Once you get to choose, it is time to go for the best overall package.

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