Credit Card 101

December 2008

Low interest - Low interest or low rate credit cards come with a low annual percentage rate on purchases, that enable you to pay less on monthly repayments than a rewards or frequent flyer credit card. If you are a person that does not pay the entire balance off their credit card each month then a lower interest rate card would be preferable to you.

Balance Transfer - Balance transfer credit cards give you the option of transferring your debt from your current credit card to a new lower interest rate credit card. Balance transfer periods can range from 6 months to one year, with interest rates for the balance transfer ranging from 0% to 5.99%. After the transfer period is complete then any outstanding balance owed from the previous credit card will be charged at the normal interest rate of the new credit card offer.

Rewards - Reward credit cards allow you earn points for paying off your credit card balance each month. Reward programs vary, ranging from cash back, shopping discounts, loyalty programs and more. Reward cards usually come with a higher interest rate, for those who have trouble paying off their credit card balance each month a rewards credit card may not be the best option, a credit card with a low interest rate would be preferable.

Frequent Flyers - Frequent flyer credit cards give you flyer points for paying off your outstanding credit card balance each month. The amount of points received and the length they remain valid vary along with the policies for redeeming points for booking flights.

Gold and Platinum - Gold and platinum credit cards give you more perks than your average credit card. The advantages range from free travel insurance, personal assistance, higher credit limits, greater rewards and more. Gold and platinum credit cards require a higher than average income to apply and as a result are not for everyone.