Types of credit cards

With a vast range to choose from, picking the right credit card can be tricky. It often depends on how much you can afford, your credit score, and why you want one – e.g. is it to spread the cost of a purchase, build your credit history, or cover an unexpected expense?

Here, we’ll help you understand the main types of credit cards, and show you where to find more information about them.

Just remember, credit cards often have a high APR, making them a potentially expensive way to borrow if you can’t pay the balance in full each month. Cards can be useful for spreading costs and giving you extra protection on your purchases, but they shouldn’t be used to manage long-term debt.

Reward cards

This kind of card rewards you for using it – for example, you may get travel miles, cashback, or store discounts. It often comes with an annual fee and high interest rates, so it’s important to ensure the benefits outweigh the costs. You may need a good credit score to get approved.

Find out more about reward cards

Credit builder cards

Low credit score? These cards may help you build your credit history. They typically have low credit limits and high interest rates, as they’re designed for people who’re seen as high risk. But paying the monthly bill on time and in full can show lenders you’re reliable, helping you get better credit offers in the future.

Find out more about credit builder cards

Balance transfer cards

Already have a credit card? You may be able to reduce the amount of interest you pay, by moving your existing card debt to a balance transfer card – usually for a small fee. These cards typically offer a 0% or low interest rate for a set period. You may need a high credit score to get one.

Find out more about balance transfer cards

Purchase cards

Need to spread the cost of a big purchase? These cards usually have an interest-free period, which can make them a cheap way to borrow. You’ll need to meet the terms and minimum payments to keep the 0% rate, and it’s best if you can pay off the balance before the interest-free period ends. Typically, you’ll need a good credit score to get this type of card.

Find out more about purchase cards

Balance transfer and purchase cards

Essentially, this card gives you the benefits of a balance transfer card and a purchase card rolled into one. It can help you spread the cost of a large purchase, while reducing the amount of interest you pay on your balance – although there’s usually a fee. If you’ve got a good credit score and you’re planning to pay off your cards soon, this option may suit you.

Find out more about balance transfer and purchase cards

Travel credit cards

Going overseas? If you book hotels or withdraw money abroad on your existing credit card, you may be hit with hefty fees. But taking a big wad of cash can be inconvenient and risky. Travel and currency cards can help you reduce the cost of using a card in another country.

Find out more about travel credit cards

Money transfer credit cards

Essentially, this type of credit card lets you borrow cash. You can transfer money from the card directly into your bank account, usually for a small fee. It’s commonly used to help clear bank overdrafts – although the debt won’t be gone, it will simply get moved to your card. Money transfer cards typically offer a 0% rate period, although you may need a good score to be approved.

Find out more about money transfer credit cards

With Experian, you can compare credit cards from a variety of companies. Plus, you’ll see your eligibility rating for different offers, helping you understand your chances of approval before you apply.

Just remember, we’re not a lender, we’re a credit broker working with a selection of lenders. This means we don’t provide credit, but we can help you find and compare different offers all in one place.

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