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What Are The Basic Credit Card Types That Are Available?

Credit has remained the economic cornerstone since quite some time. The regular American household has been estimated to possess approximately twelve credit cards, inclusive of charge cards. Generally we all feel that a particular credit card is same as any other. However the fact remains that each of the different kinds of credit cards has distinct characteristics. There are basic three kinds of credit cards available. These are:

1) Bank credit cards

2) Travel/entertainment credit cards

3) House Cards or retail credit cards

Bank credit cards

These credit cards are provided by several banks across the globe. Each of the banks is connected to a credit card group or association. A bank credit card actually involves a "revolving credit line". After you receive your monthly statement, you have the option of paying the entire amount or some part of the balance that is due. The remaining amount is carried forward again and again. Your credit card account will come with a predefined credit limit which is dependent on such key factors as credit history, disposable income, etc. The credit limit may range from $100 to several thousands of dollars.

Bank credit card holders tend to land into trouble if they are not successful in managing the credit line. When balance is carried forward and not cleared off in its entirety, the bank which issued the credit card begins to charge interest on the remaining amount. The rate of interest can be pretty steep in a lot of cases. A credit card company, on an average, charges approximately 18% interest. Thus when you are carrying forward a balance of $1000 for one year, you tend to pay $180 per year as interest which is $15 each month.

Travel/entertainment cards

Both travel and entertainment cards and bank credit cards can help to make purchases in various locations and at different stores. However the travel and entertainment cards are directly issued by credit card companies like Diners Club and American Express. Previously this form of card had only acceptance among travel and entertainment associated businesses like hotels, airlines, car rentals and restaurants. Today different forms of establishments like high end departmental stores, drugstores, gas stations accept these cards.

These cards do not come with extended credit line unlike the bank credit cards. Thus you have to clear your balance entirely within a specified time for your travel and entertainment card's account to remain active.

House cards

House cards are only accepted at a certain store or different stores under the same group. Major house card issuers are oil or gasoline companies, department stores as well as telephone companies. The house cards are very similar to bank credit cards in the sense they provide you with a revolving credit line and a credit limit which is dependent on your credit history. House cards generate customer loyalty, and at the same time help in boosting sales. These cards also provide great shopping convenience to the customers.

All sorts of credit cards do involve costs and should be used cautiously. You must choose a credit card based on your needs as well as your personality.