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Are you thinking of getting a credit card?

From mortgages to car loans to renting a house, you’ll need a good credit score to get the best deals. If you’re looking to improve or build your credit score, then a credit card plays a vital part.

But you shouldn’t pick any old card or the first deal you see. Finding the best credit card starts with knowing your options. You must find a card that works for you.

That’s where we come in! Keep reading our guide where we’ll break down the different types of credit cards to choose from.

How to Choose a Credit Card

Different credit card offers cater to different types of users. It focuses on their interests and their financial needs. By doing this, banks hit the sweet spot of profitability and their risk management.

How to choose a credit card starts with knowing what user you are and there are 3 main types. Are you a student, business owner, or ordinary customer?

Business and student credit cards work on different rules. This is because there are different consumer protections. The financial needs of these users are also more unique.

The next considerations are your financial profile. This includes:

• Credit history
• Credit score
• Current debts
• Current income

With that features like the fees, rates and rewards will fall into place. You’ll see what credit companies are willing to give you, and on what terms. With how many variables there are to each credit card offer, it’s easy to see why there are so many card types.

The Reward Credit Card

Rewards cards work by giving you something back when you use them, like travel mileage. A cashback credit card gives you cash back when you buy something. Check here for more on travel vs cash back credit card options.

There are also points credit cards that give you points to spend elsewhere. In some cases, the credit company issues its own rewards program. Think of American Express Members Rewards.

Other issuers partner with hotels, airlines, and other retailers. Either way, the more you use the card, the more rewards you build up. In general, though, you’ll want to have a credit score of around 700+ to get the best rates and premium rewards. It’s also best for people who will use it often, and on large purchases.

The Retail Credit Card

Some retailers have their own store credit cards. For example, big names like River Island or New Look. The best cards offer access to promotions, discounts, and rewards for using them.

But, the interest rates on late payments can be high. These late or missed payments get back to the credit bureaus too, affecting your credit score. You want to check the terms and conditions before signing up for any of these.

Cards for Debt Transfer and Large Purchases

In some cases, making savings on interest payments is its own reward. If you often hold a balance on your card or have an existing card debt, you’ll want a low-interest rate. Or, you want to look for a 0% APR introduction offer.

While these cards can save you money, you should make sure you’re not in a debt cycle. Make sure you’re working to pay down your debt and clear off any balances you accrue on your cards.

The Balance Transfer Card

Balance transfer cards let you finance existing card debt for very little or no interest. This is often for a period between 6-18 months. They don’t have any rewards by can be a helping hand for reducing existing credit card debt.

You’ll likely need good credit to qualify though, as issuers still want to make sure of your risk level. If you have a high balance, it should be an early step to take before you get into any trouble.

The 0% Introductory APR Card

The 0% APR card gives you a long period to use your card and avoid interest payments. If you need to make large purchases, these can give more favourable options than taking out a loan. So long as you can pay it off within the interest-free period.

You’ll need a good to excellent credit score to qualify though. And make sure you read the fine print. Know how long you have interest free, and what that interest will be should that period expire.

Credit Cards for Students, Bad Credit or Establishing Credit

For those starting, or having to start over you won’t have a great credit score. You want to find a card designed for new credit users (like students) or those with bad credit looking to improve.

The Student Card

These cards are to help students with limited income and credit histories start out. Benefits and rewards will be modest, but there will be some perks over using cash or debit cards.

They can also help with learning money management skills and help in an emergency. You must learn to manage debt and your money, as well as build up a good score by graduation.

The Secured Credit Card

Secured cards can get people with bad credit or no credit history on track. But you’ll need to pay a security deposit that the issuer keeps if you default.

For example, you could get a card with a limit of £1,000, you might need to put £1,000 upfront in cash. This is to cover the balance if you fail to make your repayments.

You get the deposit back at the close of the account though if it’s in good standing. Or, if you upgrade to an unsecured card as your score improves, you’ll get it back then.

As long as you use them well and keep up with payments, they can be a great way to boost your score. They’ll also build up a credit history for you if yours it’s sparse.

The Business Credit Card

A dedicated business credit card helps keep personal and work finances separate. Most will have tracking and reporting features, as well as rewards for business use. These can include things like advertising and office supplies.

They’re great if you use them to manage large monthly transactions, as you can wrack up the rewards. For many businesses, it also helps make managing cash flow easier.

They work like consumer credit cards and often need personal guarantees. Your credit score and history as a business owner will determine which cards and rates you get. For larger companies and non-profits you could qualify for a corporate card. These don’t need personal guarantees.

Different Types of Credit Cards Explained

So, there you have it! Now you know the different types of credit cards, you’ll be sure to find the right one for you.

Think about your credit and financial needs. Are you looking to build up your score or start it off? Are you a small business looking to manage monthly expenses? Or are you a consumer, looking for the best rewards? This is what determines the type of card you look for.

If you’re looking for more banking and finance tips, check out our blog today. We’ve got tips and tricks from industry experts to help with all your finance needs.

If you’re tired of your current bank’s level of service, you might be considering switching banks. It’s a big step, and according to statistics, one that many British people have never taken. In fact, about 39% of British consumers have never changed banks in their life.

Clearly, there’s a lot involved in switching banks and it’s a decision that no one takes lightly. Taking a balanced look at what you need to consider before switching banks can help you decide whether it’s time to take the leap.

Read on for 8 things you need to consider when switching banks. 

1. Check the Minimum Income Requirements

Most, but not all, UK banks set a minimum amount that must be paid into the account each month. If you’re switching current accounts, for most people this will not be a problem. They often set a minimum monthly income of £500 or £1000, which most people’s salaries will cover.

Be aware that the bank will expect you to continue to pay in this amount in the years to come. Can you anticipate a change in circumstances soon that could affect that? If so, consider choosing a bank with no monthly income requirement.

2. Compare Joining Bonuses and Offers

There are more retail banks eager for your business than ever before. 

In the past, the high street was dominated by a few big-name retail banks, and most people stayed with them for life. Now lots of banks offer incentives such as free cash for opening accounts and even cashback on certain bills.

However, it’s also more common now than in the past for banks to charge a monthly fee. This doesn’t just apply to premium accounts that offer additional insurances or services. Even ordinary current accounts may charge a small monthly fee for banking with them.

A joining bonus may be very tempting. But it’s should be just one consideration. Calculate how the cashback, fees, and special offers would work for you before making your choice.

3. Understand Banking Charges and Interest

As well as monthly fees, banks also charge fees such as overdraft interest and usage charges and foreign transactions.

Look honestly at the way that you use your current account. If you move:

• Are you likely to face higher overdraft fees and interest payments?
• Do you regularly make foreign transactions?
• How much would they cost with the new account?

Take a close look at the small print before switching banks. This can help you to avoid any unpleasant surprises down the line. 

4. Current Account Switch Service (CASS)

Many banks in the UK have signed up to the Current Account Switch Service (CASS). This free service makes switching current accounts much easier and even allows you to switch if you are using your overdraft.

This means that all your regular payments, such as direct debits and standing orders, will be switched over without a hitch. Your old bank will then take care of closing your old account.

Moving to a bank that has signed up for this service should make your move a lot easier. It should also eliminate the possibility of missed payments. This allows you to take advantage of better deals as they become available.

Moving to a new bank only takes 7 days using the CASS.

5. Check Out Their App

Nowadays, we all expect easy access to our bank account on the go. If you’re less than satisfied with your current bank’s app, this may be a reason you’re considering making the switch.

Just make sure that you don’t go from the frying pan into the fire. Not all online banking apps are very user friendly. Read online reviews to see what customers have to say about the app’s ease of use.

6. Consider Their Customer Service

Excellent customer service leads to happy customers that don’t even think about switching banks.

Recent surveys have shown high levels of customer satisfaction with three banks that have no brick and mortar branches at all. These are First Direct, which is a phone and online-only division of HSBC.

The other two rated highly by customers are Starling Bank and Monzo, both of which are online only. The survey was based on how happy they keep the customers – a key point to consider when making a switch!

7. Consider High Street Presence

Many retail banks have closed branches and reduced their high street presence in recent years. If you’re opening a new bank account and need to pay in cash regularly, this could be a challenge.

Investigate the options open to you for paying in cash and cheques. You may be able to pay in cheques using the bank’s app, but there may be a relatively low threshold for this.

Other banks allow you to pay in using the Post Office, but again the amount you can deposit may be limited.

8. Focus on Overdraft Charges

Many of us need to dip into our overdraft now and then. If that describes you, then it makes sense to choose a bank that allows you to do this as cheaply as possible. 

Some provide an interest-free overdraft for a fixed period, which is ideal if you have a plan to pay it off before it ends. Others allow you an interest-free amount that stays in place as long as you have the account.

Make Switching Banks a Rewarding Experience

Opening a new bank account and closing a bank account may be things we don’t do very often. But follow these tips and a bit of homework, and switching banks will be easier than you think. Make a canny choice, and you should find that you’re better of by switching!

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Ever heard of the wealth mentality and how it can help you build wealth from nothing? Well, if you want to start building wealth, you need to rethink your financial security. Financial decisions that you make in the present will determine how comfortable you’ll live in the future.

Regardless of your age, it’s never too late to start your wealth-building journey. Evaluate your savings, assets, and debt before coming up with a wealth creation plan. Avoid comparing yourself with your peers who have made great financial strides.

Amassing wealth from scratch doesn’t have to be complicated as most people think. Here are proven tips on how to build wealth at any age:

Cut Your Expenses

Start spending less and saving more for you to have enough personal finances to afford the future you want. For instance, you may cook at home instead of going to the restaurant as a way of saving money. With a tight budget, you won’t overstretch your income, and you’ll avoid running into debt.

Track your spending habits and lower your household expenses as part of your money management strategies. You should also cut your insurance premiums and re-evaluate your subscriptions to save cash.

With reduced expenses, you can allocate more money to paying off debts. The extra cash can also help finance a lucrative project or diversify your investment portfolio.

Pay off Your Debts (and Loans) Early

Your debts (and loans) can make it difficult for you to save or invest for the future. Create a debt management plan that allows you to pay off credit card balances and loans early. You should also pay off your mortgage or avoid getting one if it puts pressure on your income.

Pay more than your debt’s minimum repayment amount to settle the balance faster. You can also pay the debt twice or thrice a month to reduce the balance. Start with the most expensive loan if you have multiple loans under your name.

The downside of debts (and loans) is that they accrue interest charges. They may also affect your credit score if the lender submits your loan information to a credit bureau.

Consider Side Hustles

Turn your talent or passion into a side gig that can earn you extra cash if you have spare time. The side gig will complement your main job and improve your total income.

You may consider online side hustles like transcription, web design/coding, and writing/editing. Working online as a virtual assistant, coach, consultant, tutor, or marketer may earn you extra cash.

Offline side gigs to consider include freelance private chef or part-time adjunct professor. You may also work part-time as a yoga instructor, fitness coach, or freelance property manager.

Sign up for short certification courses to diversify your knowledge base. These certifications can help you land part-time hustles to grow your income and build wealth.

Have a Fully-funded Emergency Fund

An emergency fund will shelter you from the financial effects of an unexpected event. The size of this fund may vary with your income, dependents, monthly costs, and lifestyle. Save three to six months’ worth of your expenses in a locked account for emergencies.

While debt can help you cover a financial emergency, it will come with high-interest charges. An emergency fund will sustain you when you lose your job, unlike a debt or a loan.

Part of your emergency fund should help cover health emergencies. Money from your health savings account may help in instances where your medical insurance can’t be applicable.

Rethink Retirement

Start thinking about where you’ll get income during your retirement years. Your retirement plan should allow you to lead a comfortable and active life as a retiree.

Save a portion of your gross income into retirement accounts with good returns. You may put your money in a secure pension plan that guarantees tax relief. Furthermore, you may rely on your workplace pension (paid by your employer) to save for retirement.

The amount of money that can sustain you in your retirement years will depend on the lifestyle you’d like. You can use an online retirement tool to help you calculate how much money is needed in your retirement savings to afford that lifestyle.

Scrutinize Your Insurance Policies

A good insurance cover will prevent you from dealing with massive financial losses in undesirable situations. You should have affordable health insurance to cover unexpected, high healthcare costs. With the coverage, you enjoy free screenings, preventive care, and essential checkups.

Auto insurance will protect you from the legal consequences, medical expenses, and financial liability when you get in an accident. Depending on your lifestyle and income level, you may need life insurance, travel insurance, pet insurance, and home insurance.

Only spend up to ten per cent of your overall income on insurance policies. Discontinue any insurance coverage that drains your income and no longer suits your current lifestyle.

Diversify Your Investments

Spend part of your income on different assets and asset classes as a way of diversifying your investment portfolio. Only invest in opportunities and assets that you are familiar with to avoid running into losses. You should also look out for the latest investment tips to grow your knowledge base.

To grow your portfolio, consider exchange-traded funds (ETFs) such as stock ETFs, bond ETFs, and REIT ETFs. They give great returns without the market timing, fees, and taxes of mutual funds.

With stock ETFs, you’ll buy a company’s shares and earn money every time the company makes profits.

Bond ETFs allow municipal, federal, and corporate to borrow money from you and pay it back with interest. On the other hand, REIT (real estate investment trust) ETFs allow you to buy stocks of profitable real estate ventures. Your money will grow every time the value of the company or real estate rises.

Need More Insights on How to Build Wealth?

With these financial tips, you can build wealth gradually to secure your future years. Wealth building requires a proper strategy and a positive mindset to succeed. Consult as much as you can on how to make the most out of your hard-earned money.

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Did you know there are over 6000 banks and financial institutions in the US alone? Each of them serves a different purpose concerning customers and the broader local and global economy. But do you know what makes a retail bank different? Knowing how they work can help you make better choices regarding your finances. Read on as we discuss everything you must know about retail banking.

What Is Retail Banking?

The retail banking definition is of a bank that provides financial services to members of the public and individuals instead of businesses. It is also called personal or consumer banking. 

They provide a range of services such as loans, personal accounts for checking and saving, credit cards, and mortgages. They allow people to deposit money and gain access to lines of credit. Retail banks may be local community banks or branches of larger banks. 

This is in contrast to a business banking service. These are only offered to small and large businesses and offer different services and rates. 

How Does a Retail Bank Work?

When a retail bank gets money from a customer deposit, it will use this to earn money. The deposit will be put toward issuing a loan, on which they charge interest.

Different loans have various rates and periods in which they need to be paid back. For example, a mortgage loan will be paid over a long period and have a lower interest rate–as it is a significant amount. On the other hand, credit card debt needs to be paid back quickly and has higher rates.

Banks will offer steady interest rates to tempt customers to keep their money in the bank. They will also get profit from transaction and service fees. For example, they may charge overdraft fees and maintenance costs on specific accounts. 

Types of Retail Bank

Retail banks can be broken down into two main types. These are commercial banks and cooperatives with credit unions. Though they offer many similar services, they do bear fundamental differences. 

Commercial Banks

Commercial banks offer all the services you would expect from a consumer bank, often providing a wide range of services. Interest rates are charged on loans, and transaction fees are taken to make a profit. They will generally have a broad interest rate spread during good economic times to make more profit. 

In downturns, they will lower rates to attract more customers. Using a combination of interest rates and banking fees, they turn a profit. This is given to shareholders, the key factor making it fundamentally different from credit unions and cooperatives. 

Credit Unions and Cooperatives

Credit unions and cooperatives offer much the same services as commercial banks. However, they will not have the breadth of choice or range of services. You may also find that they have shorter opening hours and fewer employees. 

However, these establishments do not use their profit for shareholder dividends. Instead, the money is relocated to the customers themselves. This means lower interest rates on loans, higher interest on savings, and reduced transaction fees. 

Services Offered

Retail banks will offer several services to customers. Depending on the size of the bank, these may have different terms and conditions that help fix one to your needs. 

Transaction Accounts

These are the standard accounts that allow people to make deposits and withdrawals when they see fit. It will often be the account people have wages deposited into. In the US and some other countries, they are often known as checking accounts. 

Savings Account

A savings account allows depositors to hold money for long periods and gain extra interest on it. They are less liquid than transaction accounts, often having stipulations for the withdrawal of funds. In compensation, interest rates will be better than the transaction account. 

Cards

Cards include credit and debit cards. A credit card allows a customer a small line of credit for free use. This often has a higher rate of interest than longer period loans. 

Debit cards work similarly. However, they do not offer credit.

When you use the card, money deducts from the funds in your transaction account almost immediately. Therefore you can never spend more than you have.

ATM cards would also come under this category. They allow people to take money from an ATM in a particular geographical location or district.

Loans

Banks make money from the interest charged on loans, and they are a vital part of their operation. You will find a vast range of loans available from a bank. They could be long-term home improvement loans or short-term personal loans.

Online Services

There are few banks these days without online services. This will let you do e-banking, checking your statements and making transactions online. This frees up labour at the bank itself and gives you 24-hour access to services. 

Functions of a Retail Bank

Retail banks do not just serve consumers. They are part of the larger economy and provide an essential role within it. All banks are overseen by the central bank of the country they are situated in and must abide by the fiscal policy.

For example, they can control the supply of money in the economy. By adjusting the interest rates and adjusting requirements for credit, they can decide how much money is available. 

They can also stimulate the economy by lowering the costs of borrowing. When the economy needs help, they lower interest rates to increase consumer spending. In times of prosperity, this can rise, resulting in more profit.

Learn More About Retail Banking

When choosing retail banking, make sure you shop around. Different banks will have a range of services, some of which may be better for your needs. Get recommendations online or ask friends, family, and colleagues who they use. 

If you need assistance making the right financial decisions, then CFI.co should be your first stop. From savings to shares, we are the online resource for everything you need to know about the world economy.

Click here to see all our articles on retail banking.