Types of Credit Card
Posted by Peter Brady on Fri 1st September 2006 at 07:00 AM, Filed in Credit Tips, Glossary
Donation Cards
Every time the card is used the card issuer donates a percentage to charitable causes, at no additional cost to the card holder.
The ‘charitable cause’ includes recognised charities such as Comic Relief, NSPCC and many other organisations.
Store Cards
These cards are provided by a specific retailer and can only be used with that retailer. There has been much made in the press about the extortionately high interest charges on most store cards.
Interestingly, a recent NOP survey indicated that 75% of store card holders didn’t know the interest rate being charged on their store card. Surprisingly, this is despite only one in three repaying their balance in full each month.
Store cards do offer some benefits if you are disciplined enough to repay balances in full at the end of each month. These include signifcant discounts and privelaged shopping hours.
Gold & Platinum Cards
Not as exclusive as they once were, these types of cards are considered for good credit risk customers, with salaries usually above £25,000.
Benefits usually include a higher credit limit, a higher daily cash withdrawal limit and other benefits such as travel insurance, longer warranties for household appliances, mobile phone insurance and card protection.
There is also perceived status that comes with gold and platinum cards although this has gradually been devalued with their wider availability.
Charge Cards
Charge cards offer an account against which withdrawals can be made to make purchases. Balances must be paid in full each month or significant penalties are accrued.
They can best be described as a cross between a credit and debit card which can be used in the same way as a credit card. Annual fees are normally attributable.
Examples of charge cards include Diners Club and American Express. As with credit cards charge cards often include sweetners such as reward points, cash back or insurance.
There is perceived to be some cue dos associated with these cards in particular the American Express Centurion Black which offers unlimited credit and is by invitation only.
Some businesses use charge cards for staff members. This gives companies an opportunity to closely monitor company expenditure.
Like most credit cards a direct debit can be linked to a current account ensuring that balances are cleared each month.
Smart Cards
These are essentially the future for credit cards. Incorporating minute microchips rather than the ubiquitous magnetic strip makes these cards more secure and able to offer a whole raft of functionality not seen before.
For instance, one card might become multifunctional serving as a credit card and debit card. In effect, acting as an electronic wallet.
This entry has been viewed 405 times.
READER COMMENTS:
No comments yet.
