Glossary Terms

Annual Fee
A credit card issuer may charge you a fee each year for your account. <a href='/glossary/what-is-annual-fee' title='See the full definition of Annual Fee'>read more</a>
Annual Percentage Rate
The cost of credit, including the interest and fees, expressed as an interest rate. APR was created to make it easier for consumers to compare loans... <a href='/glossary/what-is-annual-percentage-rate' title='See the full definition of Annual Percentage Rate'>read more</a>
Credit Card
Any card used from time to time to borrow money or buy goods or services on credit. <a href='/glossary/what-is-credit-card' title='See the full definition of Credit Card'>read more</a>
Credit Card Receivables
Credit card receivables, also known as credit card factoring, is a type of financing available to businesses that are paid by customers with credit... <a href='/glossary/what-is-credit-card-receivables' title='See the full definition of Credit Card Receivables'>read more</a>
Intro Period
The intro period, also called the introductory period or initial rate period, is the time from the day an account is opened, when a promotional... <a href='/glossary/what-is-intro-period' title='See the full definition of Intro Period'>read more</a>
Intro Rate
A favorable interest rate that applies during a special promotion. The period of time from the day an account is opened until the promotion expires is... <a href='/glossary/what-is-intro-rate' title='See the full definition of Intro Rate'>read more</a>
Secured Line of Credit
A secured line of credit is a credit account extended to a business by a financial institution wherein the creditor has established a lien against the... <a href='/glossary/what-is-secured-line-of-credit' title='See the full definition of Secured Line of Credit'>read more</a>

Looking for a new credit card can be a bit overwhelming. There are so many choices out there. Make your search a little easier by researching cards by feature. Zeroing in on a specific type of card will save time and energy.

Here is a list of the most popular categories of credit cards. At the bottom of the list, there's also important information about prepaid cards, which are an option for those who don't qualify for a credit card or who need an alternative to a checking account.

Rewards Credit Cards

Rewards cards come in a variety of flavors. There are cards that offer cash back, points, travel, hotel, and airline miles. And within each type of reward, there are different benefits and perks. So what's the best rewards credit card? The best rewards card really depends on a person's spending patterns.

For instance, for those who spend a lot of money on everyday expenses, cash back credit cards are a good choice. Within the cash back category, there are many options. There are cards that rebate a certain percentage, such as one or two percent, for every dollar spent on purchases. But there are also cards that offer five percent bonus categories on a rotating quarterly basis. And sometimes cash back cards offer differing rewards based on spending categories, such as groceries or gas purchases.

There are also a lot of choices for those who'd like to save money on travel. There are general travel rewards cards, which offer a lot of flexibility when it comes to choosing an airline. But there are also airline-branded and hotel-branded cards, which are a good choice for those who are loyal to a specific airline or hotel.

One of the most important things to remember about rewards cards is that the details vary by card. That makes it essential to read the fine print.

Low-Interest Credit Cards

low-interest credit card is a good choice for someone who occasionally carries a balance. Having a low-interest card in your pocket is also a nice thing to have in case of a financial emergency.

Some low-interest cards offer low rates on an ongoing basis. For example, a card might offer a 9.9 percent APR on purchases. But sometimes, cards will offer an interest free card for a specific amount of time, such as 12 months. This is referred to as a "zero percent introductory rate." When the time period ends, the 0% APR card's interest rate increases to the "go-to" rate, which is the ongoing interest rate for purchases.

Balance Transfer Credit Cards

For anyone carrying credit card debt, a balance transfer is a great way to save money on interest. Here's how it works: a consumer transfers a balance from a high-interest card to a balance transfer card that's offering a zero percent introductory APR.

The introductory time period varies, but it's usually 12 to 18 months. Interest isn't charged on your transferred balance during this time period. The goal is to pay off the debt during the interest-free period. The best deals are reserved for those who have excellent credit, so this isn't an option for everyone.

Secured Credit Cards

Secured cards are a good way to either rebuild or establish credit. With these cards, a deposit is placed in a bank account and this "secures" the card. The credit limit usually equals the amount of the deposit. However, there are some issuers willing to offer a credit limit that's a little higher than the deposited amount. The cardholder then uses the secured card the same way an unsecured card is used. It's essential to read the fine print with these cards, because some secured cards have high monthly fees and interest rates. The best secured cards have no monthly service charges, low annual fees and reasonable interest rates.

Prepaid Cards

There's no such thing as a prepaid credit card. For those who can't or don't want to use credit cards, prepaid cards are an option. Prepaid cards can be purchased online or from a retail store. The amount of cash desired is loaded onto the card. Using a prepaid card is similar to using a debit card. There's a certain amount of money in the account, and this amount decreases as you use the card to make purchases.

Many prepaid cards have high fees, so it's essential to read the fine print carefully. Also note that prepaid cards do not help consumers build credit. For those looking to build credit, a secured card is a better option.

Frequently Asked Questions