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More and more people are using credit cards because they provide the convenience of not needing to have cash on hand when making a purchase, and they also allow you to split the purchase amount so that it doesn’t become a burden when it’s time to pay. Therefore, it is a payment method that is becoming increasingly common.
Did you know that there are different types of credit cards? They are becoming increasingly diverse to cater to a wider range of customers. So, we will introduce you to some of them and discuss the advantages that each type can offer to those who choose to acquire them.
Types of credit cards
As we mentioned, there are types of credit cards. They can be prepaid or those with a defined limit, which are the most common form of credit card. There are also international credit cards, which can be either prepaid or those with a defined limit.
International cards are useful for those who travel frequently, as they can be used during their trips without any hassle. They are also handy for individuals who shop online from international stores. Now, let’s delve a bit deeper into the types of credit cards. We will categorize them into topics so that you can learn more about them.
Prepaid Cards
Did you know that there are credit cards that work on a prepaid basis? Well, if you didn’t know that before, you’re now informed about them. And how do they work? It’s quite simple; all you need to do is acquire a prepaid card and then load it with the amount you’d like to set as your limit.
You’re probably wondering now, “How does that work?” Don’t worry; we’ll explain it to you. Prepaid cards don’t have a fixed limit like regular cards, so every month, you can have a different limit on it, and you get to determine it. The amount you load onto the card becomes your limit, and you cannot exceed it.
This type of card is beneficial for learning about financial education, as it forces you to stick to a limited amount for your spending. But they also have an advantage: you can have an international prepaid credit card.
And what’s the advantage of that? Well, if you’re planning to travel abroad and are concerned about overspending during your trip, you can simply request an international prepaid card and set as your limit only what you intend to spend. This way, you won’t exceed your budget during the trip and will still be able to make purchases.
Now, we’ll list some prepaid card options for you to consider in case you’re interested.
Cards with a set limit
This type of card is the most common and used by the population. They can increase our purchasing power depending on the limit the bank has approved for you. But is this really a good thing?
Well, it may be good in some ways, but it also gives you more room to get entangled with long-term bill payments. However, they also give you the opportunity to split your purchases, something that prepaid cards don’t allow since they operate based on the amount you load onto them.
The option to split purchases can indeed reduce the size of your bill and make it easier to pay off. However, it will also utilize the limit that your card has, which could mean that for a future purchase, you might not have enough available credit to complete it.
Speaking this way might make it seem like having a credit card with a defined limit only has disadvantages, but the truth is that it also has its advantages. As mentioned earlier, having a credit card increases your purchasing power and can help you build a good credit history in the financial market if you make your payments on time.
All of this can potentially give you more credit options in the future in case you need it for emergencies. Furthermore, they can be used in an emergency situation if you have available credit, eliminating the need to take out a loan, and you also have the option to split the payment to make it more manageable.
If you’re interested in getting a credit card, we’ve created a post where you can find the best credit cards of 2023. Just access it and check out the list.
