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Questions and Answers
What is the main purpose of rewards credit cards?
What is the main purpose of rewards credit cards?
- To provide customers with additional value through cash back, points, or miles (correct)
- To help individuals with limited credit history
- To charge high interest rates on purchases
- To offer 0% APR rates on balance transfers
How do cash-back credit cards differ from travel rewards credit cards?
How do cash-back credit cards differ from travel rewards credit cards?
- Cash-back cards charge high interest rates, while travel rewards cards offer 0% APR rates
- Cash-back cards are designed for individuals with no credit history, while travel rewards cards are for those with high credit scores
- Cash-back cards do not offer any rewards, while travel rewards cards offer cash back
- Cash-back cards return a percentage of money spent, while travel rewards cards earn points or miles for travel expenses (correct)
Why are low-interest and balance transfer credit cards beneficial for users?
Why are low-interest and balance transfer credit cards beneficial for users?
- They offer rewards without requiring full payment of the balance
- They offer introductory 0% APR rates on purchases or balance transfers to help save money on interest (correct)
- They have higher interest rates compared to other credit cards
- They charge high annual fees to users
What is the primary focus of credit-building credit cards?
What is the primary focus of credit-building credit cards?
Which type of credit card is suitable for individuals looking to pay off debt more efficiently?
Which type of credit card is suitable for individuals looking to pay off debt more efficiently?
What distinguishes rewards credit cards from credit-building credit cards?
What distinguishes rewards credit cards from credit-building credit cards?
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Study Notes
Types of Credit Cards
When it comes to credit cards, there is a wide range of options available, each with its own unique features and benefits. Here, we will discuss the major types of credit cards: rewards, low-interest and balance transfer, and credit-building cards.
Rewards Credit Cards
Rewards credit cards are designed to provide customers with additional value through cash back, points, or miles earned on eligible purchases. These cards are popular among those who pay their balance in full and on time, as they offer rewards without the burden of high interest rates.
Cash-Back Credit Cards
Cash-back credit cards return a percentage of the money spent as cash back, which can be redeemed against charges on your statement or as a check or direct deposit to an eligible bank account.
Travel Rewards Credit Cards
Travel rewards credit cards typically earn points or miles for eligible purchases, which can be redeemed for flights, hotel stays, or other travel-related expenses.
Low-Interest and Balance Transfer Credit Cards
These cards are designed for individuals who carry debt or are looking to transfer balances from other high-interest credit cards. They offer introductory 0% APR rates on purchases or balance transfers, which can help users save money on interest or pay off debt more efficiently.
Credit-Building Credit Cards
Credit-building credit cards are specifically designed for individuals with limited or no credit history. They often have no annual fee and may offer cash back or other rewards programs, as well as incentives for good grades or on-time payments.
Alternative Credit Cards
Alternative credit cards cater to those without established credit histories, using nontraditional underwriting methods based on factors like income, employment, and bank account information to determine eligibility.
In conclusion, understanding the different types of credit cards and their features can help you make informed decisions when choosing a card that suits your financial needs and spending habits.
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