When shopping for a credit card it’s useful to understand that there are three main types of credit cards that are common today.
The first type of credit card is the travel and entertainment card. Examples of this type include credit cards such as
American Express or Diners Club Card. These types of cards have to be paid in full every month and they have liberal spending limits.
The second type of credit card is the bank card. Examples of this include MasterCard and Visa. These credit cards are sponsored mainly by banks. The banks define your spending limits and credit line as well as the different credit terms and conditions.
Bank cards also usually give you a choice of payment options. You can either pay the balance in full each month with no interest or you can pay a minimum monthly payment and have a balance that incurs a finance charge.
The third major type of credit card is the retail store card. This type includes credit cards issued by department stores such as Sears or J.C. Penney and gas station chains such as Shell or Mobil. The credit terms and conditions on these credit cards can vary widely.
These different types of credit cards suit different needs. For example, an American Express card is very useful for small business or corporate needs and American Express caters to this market. Bank cards such as MasterCard and Visa can cater to both individual consumers and small businesses. Retail store credit cards are mostly suited for individual consumers and are also more limited in usefulness because they typically only work in one retail chain of stores.
When choosing a credit card, consider your needs and apply for the type of credit card that most suits those needs.