Credit Cards

Credit cards are in essence a loan. There are many different types of credit cards - some for students, personal, and business/corporate. This article first briefly discusses credit cards generally, and then details each type. Finally, it compares credit card to loans.

If you carry a balance, credit cards can be like very expensive, but convenient, loans made by banks, gasoline companies and department stores. The credit card issuer gives you a card. You use the card to pay for items and services up to a certain total amount -- your credit "limit." The store merchant or service provider collects what you owe from the card issuer, whom you repay. You're allowed to pay off what you owe little by little each month, as long as you pay a minimum amount each time. You're charged interest on the balance you owe (as high as 26% each year) at the end of each period, unless you pay the full balance each time your bill arrives.

Credit cards yield high profits to their issuers for several reasons. The most important is the high rate of interest -- interest on credit cards alone accounts for the bulk of the profits earned by banks that issue credit cards. Also, many companies charge an annual fee for issuing a credit card, and most companies charge late fees, over-the-limit fees and other miscellaneous charges. Finally, the companies profit by charging merchants and service providers a fee each time a customer uses the company's credit card in the merchant's establishment.

Credit Cards for Bad Credit

If you have been denied a credit card in the past due to bad credit or no credit then a Prepaid or some unsecured credit cards could be right for you. Unsecured credit cards and prepaid credit cards allow people with bad or no credit to enjoy many of the conveniences and security of a regular credit card while at the same time rebuilding or establishing your credit.

Student and Teen credit cards

What is a student/teen credit card? Whether you are in high school or college, there are credit cards designed specifically for students and other teens. What are the benefits of a Student and Teen Credit Card? They are listed here:

• Student Credit Cards are safer than carrying cash
• Student Credit Cards are more convenient than carrying cash
• Student Credit Cards make it easier to stay within a budget by tracking expenses
• Student credit cards help you build your credit history 

Corporate/Business credit card

Whether your business is small or large, a corporate and business credit card from a major company makes it easy to keep track of travel related business expenses such as car rental, hotel, entertainment and restaurant charges. There are a variety of business credit cards such as corporate credit cards and small business credit cards .

Benefits:

• Earn airline miles with some cards
• Quarterly Management Reports
• Track business credit card expenses by category and employee
• Online business credit card account management
• Travel & Emergency Assistance

Personal credit cards

Not everyone uses a personal credit card the same way. There are a wide variety of types, including special offers credit cards, credit cards with benefits, Zero interest rate credit cards and credit cards with different fee options to suite your needs. What are the some of the benefits of a Personal Credit Card? They are listed here:

• Airline Miles for every purchase
• Cash back on Personal Credit Card purchases
• Bonus Miles when using your Personal Credit Card
• No Annual Fee Personal Credit Cards

Credit Cards versus Personal Loans

Credit card interest rates are higher than on other forms of personal unsecured debt. But often, there are valid reasons for an interest differential:

• The credit card serves a dual function as a revolving credit facility and as an accepted means of transaction.
• The transactional nature of the card requires a security system.
• Credit cards are riskier to issuers because of the probability of "owner-not-present" fraud.
• The credit card companies and banks are jointly liable if the cardholder is a victim of misrepresentation by the merchant.

Despite the dangers of debt, credit cards aren't all bad. The trick is understanding how plastic works so you can use it to your advantage and not get stung by exorbitant fees and interest rates. It is possible to reduce your credit card debt by consolidating credit debts into one account with lower interest and lower monthly payments -- try a Debt Consolidation Program .