When it comes to the major credit card types, you basically have three categories to consider. Each of these three types of cards are designed for a different target audience, depending on income level, credit scores and ability to pay. Here are the three major categories and some examples of the types of credit cards that fall into each category.

The most common of the credit card types is the unsecured credit card. These are credit cards that do not require any type of collateral in order to be extended a line of credit. While different credit card merchants will set different types of criteria for obtaining a card, generally one has to have a decent credit rating, steady employment and often a minimum amount of annual income. There is a rate of interest applied each month that there is an outstanding balance carried over from the previous billing period. A minimum payment each month is usually required. There are some major credit card plans that require payment of all charges incurred in a single billing period, with no rollovers. All major credit cards such as VISA, Mastercard, Discover, and American Express are offered in the unsecured format, as are department store credit cards and gasoline credit cards.

The second of the credit card types is the secured credit card. This is a credit program designed for persons who may have gone through some rough financial patches and are getting back on their feet. Typically, a person may apply for a secured card through a bank or financial institution, opening a savings account with the issuing bank. The issuing bank in turn will provide a secured Mastercard or VISA account for the individual. The credit limit is determined by the amount deposited in the savings account. Typically, the limit will be between 80& and 100% of the deposited balance in the savings account. As the credit rating of the individual improves through keeping the account paid up, the chance for the bank to convert the secured account to an unsecured format may occur. In the interim, the savings account will be earning interest, which will also help the individual’s overall financial outlook be even brighter.

The third of the credit card types is the prepaid credit card. With these types of cards, you have the opportunity to load up the cards with a balance. As the balance gets low, you simply reload the card and continue to use it. This is also a great solution for people trying to repair a damaged credit history, but who want to stay away from having a monthly invoice to pay to a credit card provider. Consistent use of the card may in time lead to unsecured credit card offers that may be from high risk institutions at first, but generally over time, better offers with lower rates of interest will be begin to appear. In the interim, you have the convenience of using a credit card and do not have to carry a lot of cash.