Business Credit Cards Who They’re for: Business Owners & Executives Interest Rates:13.24 – 22.99%
Pros: Expect low introductory rates, cash back programs, airline rewards and special bonuses that may include: separate business and personal expenses, additional cards hooked to the same account for trusted employees, expense management reports and increased credit limits. It’s easier to qualify for these than it is for a personal loan or line of credit from the bank.
Cons: They can be an expensive way of financing purchases, thanks to late fees and interest rates. There is less purchase protection extended to business cards in the event that someone uses the card fraudulently or you need to return goods you are dissatisfied with.
Personal Credit Cards Who They’re for: Responsible Borrowers Interest Rates: 9.99 – 20.99%
Pros: Standard low-interest cards are good because you can begin developing a positive credit portfolio when you use your card regularly but responsibly, paying off the full balance each month. Many of these cards come with amazing rewards on retail purchases, cruises, airline tickets, gasoline and other perks.
Cons: You may be offered a “low introductory APR” or “free balance transfers.” Beware of this when making your decision, as that “low APR” will soon balloon to a higher rate, which will then become the standard interest you’re stuck paying indefinitely. Also, it’s only good to transfer a balance if you can pay it off in full before your “free transfer” is eligible to accrue interest. Read all terms, fees and conditions before signing!
Student Credit Cards Who They’re for: College Students Interest Rates: 12.99 – 22%
Pros: Many college students find the need for credit to cover their book purchases, groceries, gas money and living expenses. However, without any prior credit, many of the major credit companies don’t want to gamble on the chance students won’t pay the loan back. It’s easy to snag a card specially designed for students.
Cons: These cards do not have as many rewards, features and benefits as other cards. They also generally have higher interest rates and lower credit limits. Therefore, many people switch to a different card once they’ve built up their credit.
Secured Credit Cards Who They’re for: People with Bad or Blemished Credit Interest Rates: 7.9 – 19.99%
Pros: If you have damaged credit, you can never improve it unless you are brave enough to dabble in credit again. The best way to boost your score and get back on track financially is to show that you are reformed, reliable and responsible about borrowing and repaying. You may be surprised to see such a low interest rate, which is one of the great pros of this card, but you may still pay a price if you’re not careful.
Cons: Secured cards require some sort of collateral for approval. This might be a car, boat, stock portfolio, jewelry or anything else with monetary value. That means if you do not pay your debts in a reasonable fashion, you stand to lose your most prized possessions. Another con is that your credit line might be as low as $250 initially. While you can increase it later on, you may be disappointed to learn you can’t even buy certain plane tickets with your new card. There may also be additional fees involved for cardholders.
Prepaid Credit Cards Who They’re for: People with Bad Credit Interest Rates: 0%
Pros: Think of these more like debit cards. There are no finance charges / interest fees to pay. You can avoid going into debt because all your purchases have already been paid for and you cannot overdraw from your account. For many, this is a good step in learning to manage finances better. You can use it as a card, though, if you want to buy items online or pay for plane tickets.
Cons: Other fees may apply, like monthly / application / over-limit / ATM / reload fees. You cannot borrow money that is not there, which some people do for larger purchases.