- Low-interest credit cards work best if you keep a balance on your credit card rather than paying off the entire amount each month. When you have a lower interest rate, more of your payment will go toward paying off your balance rather than simply paying the interest. If you currently have high-interest cards, ask them if they will lower your rate. If they refuse, look for a low-interest card that is offering a special deal for balance transfers and move your balance over to the new card.
- Cash-back credit cards allow you to earn money for every purchase you make. Some purchases will earn a higher amount than others, depending on your specific card's plan. For example, some cards may give you a higher percentage for charging groceries, gasoline or restaurant bills. The percentage typically runs between 1 and 10 percent. Some of these cards will charge an annual fee, although they may waive it for the first year if you request it. Some cash-back card issuers will even give you a monetary bonus after you reach a certain level of charges. These cards work best if you charge a lot and pay off your account every month. This lets you earn the maximum amount of cash back.
- Airline credit cards may be tied to a specific airline, or they may all you to earn miles that can be used with a variety of carriers. These cards work best for frequent fliers, who will be charging a lot on their credit card in order to earn the maximum amount of mileage. This can be done by using the card for purchasing throughout the month and then paying the bill in full at the end of each billing cycle. There may be blackout dates and certain other restrictions on redeeming the miles for airline tickets
- Although cash-back and airline cards can fall into the category of reward cards, there are also credit cards that offer rewards for other purposes. For example, the Disney Visa card lets users earn points that can be redeemed for Disney gift cards to be used at their theme parks and stores. Certain hotel-related reward cards let you put your points toward hotel room upgrades. Other reward cards may allow you to redeem your rewards for gift certificates or merchandise from special catalogs. These cards work best when you charge a lot and pay them off iin full each month.
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If you have bad credit, you can get a secured credit card that allows you to start rebuilding a positive credit history. These cards require you to deposit a certain amount of money into a bank account. This is used as a security deposit, and your credit limit is equal to the amount of your deposit. These cards should be used responsibly, as a good payment history will help build up your credit score. Charge small amounts that you can easily pay off in a few months.
You can also get prepaid credit cards, which allow you to "load" them with a certain amount of money. You can use these cards with any merchant who accepts Visa or Mastercard, but you can only spend the amount of money that is loaded on the card. They do not help to rebuild your credit rating because you are not actually making payments. They are typically used as a convenience so you don't have to carry a lot of cash around.
