Pamela Peredo

Editorial Disclosure: The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone.

Finding the right credit card for you is an important financial step when you compare different credit cards. This is true if you are considering something like a standard credit card or a universal credit card. 

What are the Different Types of Credit Cards?

Each credit card is created for users with different financial needs and it’s important to compare credit card fees. The type of credit card you choose depends on various factors such as your income, job stability, and credit score. There are also credit cards you should avoid because of the limited use for the cards or how questionable the cards are for your finances.

What is a Universal Credit Card?

A universal credit card is one that consolidates all your credit cards, debit cards and your gift cards on a single piece of electronically charged plastic. While this may sound attractive, universal credit cards have short use periods. For example, the COIN universal credit card has a battery life of two years. Some universal credit cards have even less such as Plastc that has only a 30-day charge. Some universal credit cards are rechargeable. universal credit cards often do not use chip and pin technology but only magnetic readers. 

universal credit card

Last, all universal credit cards have various costs from a one-time cost to a membership subscription basis. Any type of credit card can be used with a universal credit card, but you still need to pay the rates and fees associated with each individual card. A universal credit card does not change credit rates or fees, it just consolidates the cards on one piece of plastic. 

When you are considering a universal credit card, you should first have a credit card to fit your budget and life circumstances. Understanding the fees for separate credit cards and the place of universal credit cards in using your cards is essential.

Standard “Plain-Vanilla” Credit Cards

Standard credit cards are also called “plain-vanilla” credit cards. These cards have no rewards such as cash back or travel rewards. Consider this card if you are interested in a credit card that is easy to understand and if you don’t want cash back or other rewards. 

A standard credit has a revolving balance up to a set limit. When you make a purchase, you use the credit up, and then have more credit when you have made a payment. Finance charges apply to any outstanding balances if you do not pay the credit card bill in full at the end of the month. Furthermore, you must make minimum payments by a set due date to avoid penalties for late payment. 

Secured Credit Card

People who do not have a good credit score or do not have a credit history might consider a secured credit card.  A secured card requires you to make a money deposit to secure credit. Usually, the credit limit is equal to the amount of the deposit. For example, if you deposit $300 to secure your line of credit, then you only have $300 of credit to use. 

The downside to a secured line of credit is that if you close the line of credit before you spend down to your deposit you may lose the money you spent in securing the line of credit. Secured credit cards, like plain-vanilla cards, often do not have rewards or cash back options. However, secured credit cards are good for those seeking to rebuild bad credit score ratings. 

Unsecured Credit Card

Unsecured credit cards don’t require a deposit when you apply. You qualify for an unsecured credit card based on your credit history, earnings potential, and your current financial strength. Unsecured credit cards are the best credit card options for someone with steady employment, a good credit rating and enough money in the bank to ensure the balance will regularly be paid off each month.

Balance Transfer Credit Card

A balance transfer credit is one method for you to consolidate your other credit cards. Essentially, you can transfer credit card debt from other credit cards or other lenders. These credit cards usually offer a zero percent introductory APR rate within a certain amount of time.  

Balance transfer cards have the advantage of allowing you to transfer high-interest debt to a lower interest card — for the short term, usually 6 to 21 months. Balance transfers can take up to two weeks to process, and you will have to make making payments on your old card during that time. There are many pitfalls to a balance transfer card. 

The first hurdle to getting a balance-transfer card is your creditworthiness. If you have a good credit history, then you are more likely to be approved for a balance-transfer card. People with a bad credit history are less likely to be approved. If you are approved but fail to clear the balance, you could have high-interest payments. 

You also may not be able to transfer all the debt to one card. The credit card issuer decides how much you can transfer to the balance-transfer card based on the new card’s limit. However, you won’t know the transfer limit until you have approval for the card. You may have to apply for another balance-transfer card to cover the transfer limit. 

Your purchasing power may be limited because new purchases are not part of the promo rate. This means you have two balances on your card of the transferred rate and the new purchase balance has a higher rate. 

Balance-transfer cards are a less desirable option because the cards require you to pay your minimum payment at whatever rate the bank chooses. Most banks will require you to pay to the low-interest balance first, which force you to accrue finance charges on the high-interest purchase balance. 

Don’t use your balance-transfer card for more purchases. Pay off credit card debt on time. Failing to pay on time could cost you the zero percent offer and bump your interest rate higher plus late fees. It’s critical that you pay down your existing debt during the introductory, promotional period for the balance transfer card. 

You might face higher rates if you do not pay down the first credit card debts during the promotional period for the balance transfer card. Furthermore, balance transfer cards often have transfer fees from 3 to 5%. It’s not a good idea to include a balance-transfer card on your universal credit card because of the short promotional period and higher rates after the promotion.

Rewards Cards

Reward or loyalty cards are one of the cards you can consolidate on your universal credit card. Choosing this option can cut down on the plastic you carry in your wallet.

Travel and Gas Rewards Credit Cards

Reward cards often have annual fees but they can also help you save money or gas. Cash-back cards can give you money on your purchases. For example, you might get one mile per $1 spent on your credit card or receive a signup bonus when you meet a spending requirement within a set amount of time. 

With gas reward cards, you earn money on gasoline purchases. Some gas reward cards may restrict the number of rewards you earn. This type of card is good for people who drive a lot. Travel and gas reward cards can be consolidated into universal credit cards.

Cash Back Rewards Credit Cards

Cash back credit cards give you points when you make a purchase. The point can usually be redeemed for cash back, statement credit, or gift cards. Some cards offer flat percentages for cash back, while others may have more opportunities to earn cash back. 

Retail Credit Cards

Retail cards are usually a partnership between a bank and a retailer or are issued by retailers. These cards fall into two categories, closed-loop, and open-loop. A closed-loop card can be used only at the retailer that issues the card such as a Target or a Walmart credit card. These cards are often called limited purpose cards because you can only use them at limited and specific locations for the issuing retailer or gas station.

Open-loop credit cards can be used anywhere. While closed-loop credit cards can help you build your interest rates, these cards have low credit limits and high interest rates. If you use these, be sure to check with the credit card provider that your payment history is being reported to any credit bureaus. 

Otherwise, you will not be able to build your credit history even though you may pay your card off on time. This caution applies if you put your closed-loop card on a universal credit card. Open-loop credit cards are similar to traditional credit cards in payment terms and rates.

Student Credit Cards

A student credit card is for college students with little to no credit history. It is easier to get these cards because it’s a first time credit card. The card usually has a lower credit limit and higher interest rates. Some student cards are secured cards, while others are unsecured with annual fees and higher interest rates.

0% Intro APR Credit Cards

A 0% intro APR credit cards may be attractive for consumers who want big purchases and can pay these cards off during a set time. The flaw of a 0% APR card is that the APR doesn’t last. It’s important to check the regular APR of the credit card after the introductory period before applying so you aren’t stuck with higher interest rates. 

A 0% APR cards are usually good for those people who have excellent credit score history as well as steady jobs and income so they can pay off the cards without incurring high interest rates or late fees if they don’t pay off the balance on time.

Credit Cards to Avoid

If you are considering a credit card, several options could be useful for you. However, you should not consider some credit cards because they do not help your credit rating or may force you deeper into debt. As a credit cardholder, one of your goals is to have a good credit history, something you can’t accomplish with these credit cards. The credit cards you should avoid are:

Subprime Credit Cards

Avoid applying for subprime credit cards if at all possible. Subprime credit cards and the rates the providers charge for these credit cards are some of the worst credit cards you can have. The subprime credit cards are for people who have a bad credit history, are in bankruptcy or who have limited credit histories. The cards usually have high interest rates and expensive fees. Interest rates may run as high as 30%. 

Approval is often quick, even for people with bad credit, but with lower credit limits and purchasing power. Interest rates may spike if your payments are late or if the cardholder exceeds any borrowing limits. Some subprime credit cards may require a deposit similar to secured credit cards. Unsecured subprime credit cards may have annual fees. 

The annual fees are often counted against the credit limit, meaning your credit limit (the amount you can buy with) is reduced from the annual fees the provider charges you. If you must use a subprime credit card, pay off the credit card balance each month and on time to avoid higher interest rates and/or fees associated with the cards. Don’t include subprime credit cards on your universal credit card because of how the cards may negatively affect your credit history.

Prepaid Cards: Not a Credit Card

Prepaid cards are not credit cards. They are similar to debit cards, but instead of being connected to a checking or saving account, these cards require the cardholder to load money onto the cards. Purchases are made from the card’s balance and the spending limit does not renew until you load more money onto the card. Prepaid cards do not add to or enhance your credit history score. The benefit of a prepaid card is that you know your spending limits from the amount you put on the card, which is useful for those who need to stay on a budget or aren’t worried about credit history. While you may include these on your universal credit card, having a prepaid card will not help you financially.

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