Credit Cards: There's More Than 1 Type?🤯

By now you have a brief introduction from my first blog on credit card rules you need to know, but let's do a deeper dive into these magic plastic cards.🌟  
 
The type of credit card you receive is largely based upon your intended usage, credit score, and income. Simply put - the better your credit profile, the more perks you receive. Those perks include but are not limited to:

 
Secured credit cards are based upon the amount of money (collateral) you put up to get the card in the first place. Say if you want a secured credit card with a $1,000 limit, then you have to put down a $1,000 refundable security deposit with the credit issuer - kind of like how you would do with an apartment. This is to ensure that if you default, the credit card company will be able to get their money. Don’t worry, you can get the $1,000 back depending on the credit issuer’s policies, like transferring your card to secured or by closing the account.
 
Unsecured credit cards, on the other hand, do not require any collateral.  The credit card company issues you a card based upon the good faith that you will pay back the charges you accumulated. Both cards are a way to build credit which will result in future credit offers.
 
Credit limits are important factors in building credit. It may be better to have 1 credit card with a $5000 limit instead of 3 credit cards with $500 limits. You may ask, how do you get higher limits? Well here are a few ways:

• Increase income through a new job, raise, or side hustle.
• Become an authorized user on a trusted adult's credit card account. 
• Pay off debts so that you have a lower debt to income ratio. 

Remember, your responsibility handling credit is more apparent with higher limits!
 
Credit cards offer low introductory rates to lure you into higher rates later.  It's not unheard of to have 0% interest on new cards or balance transfers for 12 to 24 months, but be careful because late payments may negate the 0% rate and you may find yourself with a rate upwards of 20%. Read the fine print.
 
It's also not unheard of to have annual fees.  Credit card companies consider these maintenance fees and can be as low as $29 a year and as high as $300.  These types of credit cards may not be worth it if you are not taking full advantage of the perks or can qualify for a card with no fees.
 
Cash back rewards are based upon your purchases. The iconic Kevin Hart advertises cash back rewards for the Chase Unlimited Card.  It includes 5% on travel, 3% on dining, 3% at drugstores and 1.5% cash back on everything else with no annual fee. This can be a great perk to save up and completely pay off your credit card balances!
 
Credit cards are not limited to Mastercard, Visa, Discover, or American Express.  Department stores such as Kohl's, Neiman Marcus, or Nordstrom have their own line of credit cards too, but they also have their own rules and disclosures.
 
Finance companies can be used to finance medical procedures, lawn equipment, laser hair removal… you name it and they can finance it. As long as you are using your card for these items, you can use and reuse for the specified expenditures. But be careful, these types of cards usually have high interest rates and not so friendly terms.
 
No matter what kind of credit card you have, paying on time is of the utmost importance.  Make sure to read the fine print regarding balance transfer fees, membership fees, cash advance fees, and late fees.  And lastly, don't let a fluctuating credit score get to you...just like the score can fall, it can rise again.📈