Types of Credit Cards

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Types of Credit Cards

Credit cards come in different forms.

General credit cards

General credit cards are the most common type. They are issued by a bank or other financial institution and are used in any place of business that accepts them. They come with a limited line of credit.

Secured cards

A secured card is a general card with one difference: you must deposit money with the financial institution that offers it. That money then becomes its credit limit. The money is a form of collateral that protects the institution if you should default. Because of this collateral, secured cards are relatively easy to get, as opposed to unsecured cards. They are an option for those seeking credit for the first time or those seeking to rebuild credit.

Store cards

Store cards are general credit cards that are offered by particular retailers. They can be used only at those retailers.

Co-branded credit cards

Co-branded cards are general credit cards that have a special relationship with a company or organization. Ebay and Amazon, for example, issue co-branded cards. You can use these cards where you would use a general credit card, but they give you extra rewards if you use them with the company that co-brands them.

Charge cards

Charge cards are the same as general credit cards with one exception: you must pay your balance in full every month. If you fail to, you will incur high late fees and restrictions on further use. Charge cards typically do not come with a limited line of credit.