Best Types Of Credit Cards

There’s a credit card for nearly every scenario. Whether you’re going on vacation, get 1-2% cash back, wanting to get frequent flyer miles, or need a balance transfer there’s no shortage of options.

Below we outlined the best types of credit cards for 2021.

1. Get Cash Back

  • With cash back cards you earn a percentage of the amount you spend each month – typically 1-2% cash back. If you spend $10,000 on that card each year you’ll earn $100 at 1-percent.
    • Chase Freedom Unlimited = 5% cash back on seasonal categories, 1.5% cash back on all others
  • Cash back cards are popular for businesses too, especially if they have large re-occurring expenses each month (ex: monthly ad spend on Google or FB).
  • It can be hard to get a cash back credit card if you have a bad, or even mediocre credit score. Good ones require a credit score of 700-850.

2. Consolidate For A Lower Interest Rate

  • For those with credit card debt you can take advantage of 0% intro APR cards.
  • Most new cards offer a “teaser rate” for the first 12-18 months on all purchases, and sometimes balance transfers.
    • Citi Diamond Preferred Card = 0% interest for balance transfers and purchases in the first 18-months
  • If you have bad credit you may get approved for a one-off balance transfer. This type charges a 3-4% of the balance transferred, but depending on your high interest card it’s probably worth consolidating.
  • Or for a long-term, or low-rate card. These have low interest rates – for example, 6-7% – and last as long as it takes you to pay off the money.

3. Get Travel Perks

  • You’ve probably noticed that the airlines offer their own travel reward calls – for each dollar you spend you’re earning “air miles” and may earn you perks (ex: car rental or upgrading to first class).
    • AAdvantage MileUp Card (American Airlines) = 2 miles for every $1 spent
  • Gold and platinum cards usually give you extra benefits– such as travel discounts and overseas assistance.
  • You can also get airline-specific travel cards through American Express.

4. You Have Bad Credit

  • If you’ve had trouble with your borrowing in the past, credit card issuers may not be willing to offer you a new card. If this is the case you’ll need to get a pre-paid or secured credit card.
    • Pre-paid card = you need to deposit the amount you can spend
    • Secured credit card = they require you to put up a percentage of the total credit line to secure the line of credit (usually 25-50% of the total credit amount).
    • ** Cards for bad credit usually come with an annual fee of $35-99.
  • Once you show that you can pay your card each billing cycle, other issuers are more likely to offer you a card in the future.
  • For anyone with a credit score below 600.

5. Pay The Full Amount Each Month

  • Charge cards don’t come with a specific credit limit and balances must be paid in full each month and most charge an annual fee.
    • American Express Gold Card = $250 annual fee
  • Cardholders get points for each dollar spent. Points are redeemable for purchases, dining, airfare, upgrades or hotel expenses.
  • It’s the best type of credit card if you need to be reimbursed for erroneous or fraudulent charges.
  • Charge cards are quicker to reimburse vs. a regular credit card.
  • Fees and penalties are much higher than typical credit cards.

6. Reward Specific Credit Cards

  • Online and retail stores sometimes offer their own cards and offer better cash back.
    • Amazon Rewards Cards = 5% cash back on Amazon, and 1% cash back anywhere else
    • Uber Cash Card = 3-5% cash back on Uber, 1% cash back on other purchases
    • ExxonMobil Smart Card = 6-10¢ off every gallon of gas

7. Credit Cards For College Kids

  • Low credit line, but low interest cards for college students looking to establish a credit score. Usually offered at conventional banks, but we recommend getting your student card at your local bank or college credit union.
    • Student cards = expect 13-20% interest (with $500 credit line)
  • School credit unions will give you the best interest rate and can be your go-to option when shopping for a home mortgage or car loan.

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