When used wisely by savvy consumers, credit cards can be an excellent resource for a variety of instances. The important thing, though, is to make sure you understand the different types, as well as the pros and cons of these credit cards.
Types of Credit Cards to Consider
One of the main ways consumers choose which credit card company to use is by learning about the credit card rewards and perks offered.
Today’s credit card rewards are like no other. From cash back on purchases and points that can be redeemed for amazing items to free flights and vacation stays; it is smart to do your homework when looking for a new credit card. Here are some of the different types of credit cards and their perks.
Reward Credit Card Perks
- Cash Back – Consumers are rewarded with cash back via a credit on your account which can be used to either pay your credit card bill, be directly deposited to your bank account, or even redeemed for shopping at a variety of online stores.
- Miscellaneous Travel Points – Earn points that can be redeemed for travel adventures. Benefits vary by card but can include great savings for your next vacation.
- Low to No Interest – The reward of using these cards is that you save (a lot) of money on interest. Usually issued at amazing rates like 2.9% and even 0%, these credit cards are great for those who want to lower rates on larger debt.
- Air Miles – Most airlines offer air miles that allows you to redeem them for free flights. Other perks often include VIP airport lounge access and free checked baggage.
- Shopping – For those who have a favorite store, a credit card that gives you rewards for your loyalty is a great choice to save big.
- Free Hotel Stays – Brand specific credit cards earn points that you can redeem at major hotels around the world, which is great for those who love to travel.
Each of these types of credit cards offer unique rewards and perks. Do your research to determine the best fit for your situation.
Pros and Cons of Credit Cards
As with anything, there are pros and cons to using credit cards – even if they do have attractive perks. Here are some to consider:
Pros of Credit Cards
- Rewards – Great rewards and perks can save you money.
- Credit Builder – Credit cards are a good stepping stone to establish credit to earn better interest rates on future financing options.
- Convenient – In today’s digital world, carrying a credit card rather than cash just makes sense. It’s more convenient and definitely safer.
Cons of Credit Cards
- Paying Interest – If you do not pay your balance each month, interest accrues… and quickly!
- Overspending – Too often people overspend on credit cards, resulting in large debt.
- Late Payment Fees – Missing the due date for your credit card can mean hefty late fees as well as a dent in your credit score.
Using a credit card can really have some advantages. The key is responsible spending and prompt payment to reap the rewards offered.