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Types of Credit Cards and Their Peculiarities

Currently, banks offer their customers a wide range of credit cards, which although differ in terms of issue, but still have a number of common characteristics. Understanding the key characteristics will allow you to choose the credit card that will best suit your needs.

Credit Card Types

There are several types of credit cards, and the same issuing bank can issue both a specific type of credit card and several versions of the same credit card. Learn more about credit card issuers here

The following types of credit cards are most popular in world practice:

  • A standard or regular credit card that does not have any special benefits or advantages, but can attract a lower interest rate to attract customers.
  • Credit card for transferring debt from one card to another. It is used if the client wants to get a credit vacation for a certain period. In this case, the client can “transfer” the debt to a new card, which establishes a grace period for repayment for a certain period, which will allow avoiding delay and prevent credit deterioration.
  • Bonus credit card on which rewards are paid for purchases (cashback).
  • A premium credit card (Visa Platinum, Visa Infinite, MasterCard Platinum, etc.) provides a number of benefits and advantages (such as concierge service, insurance, participation in various discount programs, etc.), usually for a higher annual fee .
  • A retail credit card is associated with a particular store and offers rewards or discounts on purchases at that store. Co-branded retail credit cards have Visa, MasterCard or American Express logos and can be used anywhere.
  • A guaranteed credit card requires you to make a security deposit, which is a guarantee for the fulfillment of credit card obligations. A guaranteed credit card is usually issued by those who have a “tainted” credit history, or borrowers with a low credit rating.
  • A payment credit card is a payment card with an allowed overdraft, according to which the existing loan debt must be fully repaid at the end of the month (unlike a classic credit card, on which only a mandatory minimum payment should be made monthly).

Credit Limit

Most popular credit cards have a credit limit, which is the maximum amount of debt that you can have on a credit card at a particular point in time. As part of the credit limit, you can make purchases in the retail network and make online purchases on the Internet, withdraw cash at an ATM or through the bank’s POS terminal, and pay for various financial expenses, including repay other loans, etc.

The credit limit is set at the time of issuing a credit card and may subsequently be revised due to changes in customer income, credit history and a number of other factors. For exceeding the credit limit, banks usually charge an additional commission or increase the interest rate.

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