Image Copyright: Roman Motizov
Travel. Cash back. Balance Transfer. Airline. Small Business. With the amount of credit card marketing in America today, these phrases are becoming more and more widely recognized. According to one CFPB study, banks spend over $3B on credit advertising each year.
Even though many of you may have come across this nomenclature before, some may not know exactly what each of these different credit card types does or how they differ. How are travel cards different from airline ones? Balance transfer from zero percent cards? This article will give you a crash course in each, making you one step closer to becoming a credit card expert.
- Rewards: Generic Travel, Airline, Hotel, and Cash back. 'Rewards cards' is an umbrella term that encompasses all credit cards that earn their users some form of prizes. Travel, airline, hotel, and cash back are the 4 major categories falling into the scope of these. Airline and hotel cards are ones co-branded with a particular company. The rewards these cards offer tend to be mainly redeemable for more nights or flights, with the affiliated company.
Generic travel cards, on the other hand, offer users greater flexibility, at the cost of rewards. These cards will generally provide consumers a lesser value per dollar, and in turn give them more travel and redemption options. Cash back credit cards are aimed at more general consumer spending - gas stations, grocery stores, etc. The rewards these cards provide are also a lot more flexible. Instead of being miles or points that you use to pay for additional travel, cash back credit cards provide users with statement credit - that is money that can be used to offset charges on their credit card bill.
Balance transfer credit cards do the same, except on any credit card debt that is transferred from another card to it. Typically, there is a small fee associated with such a transaction. However, this added charge usually pales in comparison to the interest savings these cards can produce.
Account holders, on some of these business cards, also have the ability to export spending into different file formats, or products such as Quicken. This can greatly streamline accounting and expenditure management for a company, which is especially important around tax time.