Types of Credit Cards – Analysis

Credit cards have entered into our soul. Young and old alike are addicted to the usage of credit cards. Its undoubted supremacy is due to the elimination of carrying cash/check books with us while going for shopping and also on travel. Due to their compact size, people carry an entire bunch of plastics in a single pouch. Unreasonable fear of theft is eliminated. According to established financial estimates, there are an estimated billion credit cards in circulation in the United States alone. An average American household possesses at least twelve credit cards, which includes charge cards. There are three different type credit cards, which are in vogue now – Bank Credit cards, Travel and entertainment cards and retail or house cards.

Bank Credit Cards

Actually, the banks cannot issue Visa or Master Card, whose logo is there in each bank card. It looks as though it originates from either Visa or Master Card, in actuality; they are actually issued by thousands of banks across the globe. There are approximately over 20,000 financial institutions in the members list of these cards.

A bank card is of a revolving nature. Every month we will receive a statement showing all the details of the expenditure of the current month, as also the balance outstanding as of that month. A pre-determined limit regarding the amount that can be drawn will be communicated by the relevant bank. For all the balance loans remaining unpaid, banks will charge interest. Generally the interest rate is around 18 per cent.

Travel and Entertainment Card

These Cards are different from Bank Cards, since they are issued directly by Companies like American Express and Diners Club. They were primarily accepted by travel and entertainment type businesses like airlines, restaurants, hotels, and car rentals but now they find ready acceptance by huge departmental stores, drugstores, and gas stations. Buyers of these cards also expect supplemental benefits like luggage insurance and frequent flying miles

These cards do not offer extended line of credit like bankcards and expect the card holder to clear the outstanding balance of one period within the next one or two cycles, to keep the account stay current.

At the financial year-end, these card originators send financial statements, which makes it easy for the card holders to file their tax returns accurately.

House Cards

As opposed to the above two categories cards, House cards are accepted only at specified Stores within the same chain and oil and gasoline companies. They are also referred to as Retail Cards.

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