Different Types of Credit Cards that Can Be Used As Loan Alternatives

Getting a loan can be challenging for unemployed and self-employed individuals. But, there are loan alternatives that they can still enjoy, such as a credit card.

For a person who wants to borrow money, a credit card can be the best option. Nowadays, cashless transactions are highly popular. Not one adult probably does not have one. People use it when they shop, dine, travel, watch a movie or a concert, pay utility and hospital bills, and get cash for things they cannot buy on credit.

Perhaps, you only have one or two credit cards, but do you know that they come in at least ten types?

Here are the types of credit cards and their features.

  • Standard Credit Card

The standard credit card is the most common type. Because it is easy to use, many people prefer to have one. You can use it to shop for food items, buy clothes and accessories, pay for cinema, concert, or plane tickets, and get cash loans when it is necessary.

You will receive a statement every month for the amount due. Usually, the total amount to pay is divided into several payments, making it easy to pay. Prompt payment without balances can save you from late payment penalties and a higher interest rate and enhance your credit score.

  • Balance Transfer Credit Card

People that uses several cards find having a balance transfer credit card convenient because it allows fund transfer to another card for free in the first 12 months, providing you a convenient way to pay several debts using one credit card as long as your balance would allow it. If you are using several credit cards from the same financial institutions, transferring funds is not possible. To avail of this privilege, try to have credit cards from different providers.

  • Student Credit Cards

Students usually keep a student credit card. Although students do not have a credit history and a credit rating yet, they can still apply and get one. The only requirement is their enrollment to a university for a four-year course. Cardholders can avail of low-interest rates on balance transfers and some rewards.

  • Rewards Credit Cards

Some people who love to shop or travel will find getting that you earn when making purchases using the credit card can come in a cashback or travel. You can redeem the cash reward or use it to buy something. People that love to travel prefer the travel points that they use to get free flights and free accommodation.

  • Cash Cards

A cash card does not put limits when you use it. However, only those with an excellent credit history can apply for it. You can spend or get cash loans as much as you want. However, you must pay in full at the end of the month so that you can use the card again. Make on-time payments to prevent charges and penalties, as well as the cancellation of your card.

  • Secured Credit Cards

People that do not have a credit history can apply for this card. You make a cash deposit for the privilege of using the card. However, the amount that you can spend must be equal to the cash that you deposited as security. Prefer you have to pay monthly to keep the security deposit and use the card again. If you do settle the mount, you cannot use the card anymore.

  • Subprime Credit Cards

People that cannot apply for a card anywhere because of their bad credit history can check issuers of subprime credits cards. However, the interest for this type of card can be higher than the standard. There are other fees to pay. However, this could be an opportunity to build your credit history so that you can eventually qualify for low-interest credit cards and loans.

  • Prepaid Credit Cards

People who want to stay within their budgets prefer to use a prepaid credit card. With this type of card, you deposit an amount that you plan to use for your monthly purchases. Once you have spent all, you cannot use it again unless you make a new deposit. If you plan not to spend beyond your budget, this card is the best for you as long as you stop buying things once you used up your deposit. Stop yourself from reloading until the next month to make sure that you stick to your budget.

  • Business Credit Cards

If you are a business owner, you can apply for a business credit card. The use of this card is strictly for business only. Having this credit card will allow a business owner to separate his personal and business expenses. However, if you apply for the card, your credit history will determine its approval. As the holler, you are responsible for paying the amount due every month.

Check all your options when looking for a credit card to use. Always consider the cost of getting one as well as the convenience that each type offers.