We all seem to have some plastic in our wallets, but all plastic is not the same.
A Debit card is completely different from a credit card. When you swipe a debit card it actually works more like a check, with the difference being that you don?t have to whip out your pen and write it. You can even pretend it?s a credit card because at the checkout it works about the same, but you are not charging your purchase but rather having it deducted from your account.
A Charge Card is like a credit card but you have to pay the balance off every month. Often these cards will give you a high spending limit or they may even have an unlimited balance, but you can?t carry it over. You have to pay it off every single month.
A Store Card is basically a credit card that is only good for the store from which it was issued. In general, these cards are more detrimental to your credit score than helpful because the idea is that a good money manager would be more likely to pay cash for that closet full of beautiful clothes instead of charging them.
Affinity cards are credit cards offered by banks in a partnership with airlines, hotels or car companies. When you use these cards you get bonuses from the partner companies, for instance, airline miles.
Unsecured or revolving cards allow you to pay a minimum payment, usually 2-4% of the balance and carry forward the remaining balance. If you pay off your balance and then make a purchase you will not be charged interest on the new purchase until the next billing cycle begins, essentially giving you a short window of no interest if you pay it off immediately.
A Secured card is good for people who need to reestablish credit. The consumer will put a certain amount of money into an account and then use that as a guarantee or collateral for the new credit card. When you consistently make the payments you are establishing a credit history. Most secured cards can become unsecured after a certain period of time.
A consolidated card is just a credit card that you use to eliminate the balance on multiple cards. You consolidate all of the debt onto one card, use a balance transfer and then you only have the one new card.
What types of credit cards do you have?
Image via Flickr by smemon
