Know Your Credit Cards

A Credit Article Contributed by Girish Katyal

Types of Credit Cards

In today's world more and more people are using credit cards to make payment for there purchases. A credit card is plastic card which a person in whose name it is issued, uses it to pay for the purchases he makes and also to withdraw cash up to a prescribed limit. The credit provided to the person can pay in full by him at the end of a specified period or in part payments over a period of time and the rest of the balance are taken forward as extended credit.

It is convenient to carry just a piece plastic in your pocket instead of lots of currency notes. Credit cards are usually issued to those who have a good credit history. The credit rating of a person is taken in to consideration by the companies issuing the credit card. There are different types of credit cards and can generally be grouped in the following categories:

Secured Credit Cards

Secured credit cards are mostly issued to those people who have no credit record or a bad credit record. The interest rate is much higher than what is charged for other types of credit cards and the authorities issuing the secured credit cards requires a security deposit so that the repayment of the credit granted can be recovered in case of a default. The security deposit and the credit granted are more or so equal therefore the term "secured" credit cards is used.

Some of the companies do offer credit cards for those with bad or no credit history that do not require a security deposit but they charge higher application fees, annual fees, and interest rates in comparison to standard or classic credit cards.

Unsecured, Platinum and Gold Credit Cards

To become a platinum or gold card holder you have to meet certain pre-requisites. One of them is that you must have an outstanding credit rating. Most of the credit card issuing authorities do not differentiate between gold and platinum cards in terms of interest rates and fees charged but the platinum credit cards have higher credit limits and more advantages like cash-back on your bills and bonuses, such as incentive programs, shopping, dining and travel concessions.

Credit limits related with gold and platinum cards are very high and are only issued to person with a higher credit rating.

Unsecured, Standard and Classic Credit Cards

Unsecured, Standard and classic credit cards have higher rate of interest and a reduced amount of terms favorable to the holder than unsecured, platinum and gold credit cards. There isn't much dissimilarity between a standard and classic credit card. The term "classic" is the brand name used by Visa for its standard credit card. Some standard cards have annual fees, but most of them don't require you to pay yearly fees.

Credit limits related with standard cards usually are lower than those of unsecured, platinum and gold credit cards but they usually offer the advantages and benefits that come with platinum and gold credit cards.

Always go through the terms and conditions of these credit cards very carefully before applying for one.