Different Types of Credit Cards in the United States

By Corey M. Mackenzie

  • Overview

    Many kinds of credit cards are used in the United States. Visa and MasterCard are the most well-known but are not the only types of cards. Discover cards and some types of American Express cards are also popular cards. Although credit cards are usually associated with banking institutions, there are also cards offered by department stores and other merchants. These kinds of cards are often for use only in the issuing store.
  • Types

    Visa, MasterCard and Discover are the primary types of credit cards in the United States. Some American Express cards also function as credit cards, but the regular American Express card is a charge card. The difference is that charge cards require you to pay off the full balance each month. One other common type of credit card is the store shopping card, usable only at the issuing store. Credit cards can be further categorized as secured or unsecured. Secured cards are those that require a savings deposit.
  • Features

    Visa and MasterCard credit cards are issued by banks and, therefore, are also called bankcards. Regardless of the company issuing the credit card, many cards offer extra perks such as cash back on each dollar spent or points redeemable toward gifts, hotel stays or flier miles. Some credit cards are good for use only at particular stores such as department stores. These cards are issued directly by the store and bear the store's name. These cards should not be confused, however, with cards that bear a store's name and yet are Visa or MasterCard, acceptable everywhere Visa and MasterCard are accepted. Credit cards require a minimum monthly payment whenever there is a balance on the card. The amount is usually a small percentage of the total balance. Each month that the card holds a balance, a finance charge is added to the amount owed.

  • Fees

    Annual fees are not uncommon. The amount is usually small, but can range from around $25 to more than $100. Additional fees include cash advance fees, late fees and over-limit fees. Some card companies charge account activation fees and processing fees. You should read the terms and conditions of credit before accepting a card.
  • Function

    Credit cards provide a way to purchase items or services without having to pay the full amount right away. Credit cards are also convenient for shopping for merchandise online or booking flights online. In addition, they provide extra security to the buyer because most items you buy with a credit card are automatically protected. If a product is defective, you won't have to pay.
  • Considerations

    When you use credit cards responsibly and pay at least the minimum on time each month, you show other lenders that you are responsible with your money. Banks issuing credit cards sometimes merge with, or are taken over by, other banks. In these cases the name of your card and some of the rules and regulations regarding your account may change. Despite other changes, you will usually be able to retain the card and your current credit line.
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