The first step in choosing the best financial deal is realizing that there are a variety of different products available. Following are some of the most common types of plastics:
Balance Transfer Credit Cards
Balance transfer credit cards let you transfer higher-interest credit account balances onto a different one with a lower interest rate. For instance, if you transfer a balance to a bank account with a low introductory annual percentage rate (APR) of zero percent, the APR for this balance will typically stay at the lower interest level for a specified period of time, potentially saving you hundreds of dollars in interest charges.
Low Interest Credit Cards
Low-interest credit cards - Offer either a low introductory APR that change to a higher rate later or to a low, fixed-rate APR. Using this type of plastic can offer significant savings on interest, especially when you make larger purchases and pay them off before the end of the introductory period.
Cash Back Credit Cards
Cash-back credit cards - Give you cash rewards for making purchases with the plastic. Most cash rebates are around 1 percent of the total purchases, excluding interest and finance charges. This type of financial products is particularly good if you're faithful about paying off balances each month.
Reward Credit Cards
Reward credit cards - Similar to cash-back deals, they offer frequent-flyer-miles, hotel discounts and other rewards just for using the plastic. Basically, you accumulate points toward a reward structure, based on how much you use it over a period of time.
Airline Frequent Flyer Credit Cards
Airline mile or frequent flyer credit cards - Award "mile" or "point" credits whenever you use your plastic, based on the dollar amount of your cashless purchases over a period of time. You can redeem your points for airline travel, much like you would in an airline-sponsored frequent flyer program. These deals are great if you travel frequently or simply want to use your account to plan vacations.
Pre-Paid Credit Cards
Pre-paid cards - Work like gift cards at retail stores. You can deposit any amount you want and then use the plastic to make purchases up to that amount. These types of bank products generally don't require a report's check, and some actually have credit re-builder and rewards programs.
Secured Credit Cards
Secured credit cards - Plastics that are "secured" with a cash deposit or other collateral. They're ideal if you have very little or damaged credit.