Credit cards are issued by a credit card company (or issuer bank) that sends you a monthly statement of your transactions. You then pay all or part of your balance to the credit card company each month. Credit cards allow you to carry part of your balance into the next statement period. There are 5 common types of credit cards:
General Credit Cards: This is the most common type. These are the credit cards that do not require a security deposit and can be used in most stores. The general credit cards do not have a “special relationship” with a particular organization or retailer.
Co-branded credit cards: Same as the general credit cards, but they have a “special relationship” with a particular organization / retailer (e.g. the Amazon.com credit card). As a result, even though they can be used in most stores they provide extra rewards and benefits in connection with that particular organization / retailer (i.e. Amazon.com, in this example).
Charge Cards: Charge cards are identical to general credit cards, except that you must pay your total balance in full every month.
Secured Cards: Secured cards often represent the only viable credit card option for people with bad, limited or no credit history. They are practically identical to general-purpose credit cards, with the sole exception being that a security deposit is required to open a secured credit card. This deposit is fully refundable and will be returned to you upon the closing your account with no outstanding balance You can fund this deposit in multiple ways, including via checking account, money order or cash (in the event that the bank offering the secured card has a branch in your area). Given that the security deposit typically serves as a secured card’s credit line, most issuers offer guaranteed approval, as there is no threat of a consumer not paying back what he owes.
Store Cards: Store cards are identical to credit cards, except that you can only use them to make purchases at the store that gave you the card (e.g. the Macy’s Credit Card).
If you are not sure which credit card is right for you, you can also get credit card advice by our proprietary ‘Credit Card Advisor’ tool.