While we tend to think that a credit card is a credit card, there are actually three different kinds of cards available today. They are:
a card offered by a bank;
a travel and entertainment card; and
a “house card.”
You’ve probably noticed that thousands of banks offer credit cards. And all of those credit cards carry the Visa or MasterCard logo, along with the bank’s name.
Visa and MasterCard do not offer credit cards directly to consumers.
Visa is a privately held membership association. It’s owned by 21,000 member financial institutions around the world, and virtually all of those members offer Visa credit cards. Likewise, MasterCard has approximately 25,000 MasterCard, Cirrus and Maestro members worldwide.
These types of credit cards are “revolving” credit accounts. You can pay all or part of your balance each month, pay off the card, run up the balance again and so on. However, your account will come with a preset credit limit, which can be as low as $100, as high as $40,000—or even higher.
Because bank cards’ terms and conditions vary dramatically, we’ll devote an entire chapter later on to choosing the right credit card for your needs.
Travel and entertainment cards are different. They are not offered by banks. Instead, they are offered directly by American Express and Diners Club.
No matter where you apply for an AmEx or Diners Club card, you will get the same terms and conditions. What’s more, both American Express and Diners Club cards come with no preset spending limit.
In most cases, you will have to pay your balance in full each month on an American Express card. Diners Club is similar, but it gives you two months to pay without incurring penalties (which is designed to appeal to travelers who take long trips).
Both travel card providers also offer many of their customers year-end summaries of their charges, which can be useful at tax time, when tallying travel and entertainment expenses.
Unlike bank cards and travel and entertainment cards, which can be used in a variety of businesses and locations, house cards can be used only at a specific chain of stores.
Major issuers of house cards include:
department stores (Sears is the biggest issuer of house cards, overall);
oil and gasoline companies; and
telephone companies.
And then there are specialty cards, like the one you can get at your local tire center.
Like travel and entertainment cards, most house cards come with the same terms and conditions, regardless of where you apply. Like bank cards, most house cards are revolving accounts, so you do not have to pay your bill in full each month.
a card offered by a bank;
a travel and entertainment card; and
a “house card.”
You’ve probably noticed that thousands of banks offer credit cards. And all of those credit cards carry the Visa or MasterCard logo, along with the bank’s name.
Visa and MasterCard do not offer credit cards directly to consumers.
Visa is a privately held membership association. It’s owned by 21,000 member financial institutions around the world, and virtually all of those members offer Visa credit cards. Likewise, MasterCard has approximately 25,000 MasterCard, Cirrus and Maestro members worldwide.
These types of credit cards are “revolving” credit accounts. You can pay all or part of your balance each month, pay off the card, run up the balance again and so on. However, your account will come with a preset credit limit, which can be as low as $100, as high as $40,000—or even higher.
Because bank cards’ terms and conditions vary dramatically, we’ll devote an entire chapter later on to choosing the right credit card for your needs.
Travel and entertainment cards are different. They are not offered by banks. Instead, they are offered directly by American Express and Diners Club.
No matter where you apply for an AmEx or Diners Club card, you will get the same terms and conditions. What’s more, both American Express and Diners Club cards come with no preset spending limit.
In most cases, you will have to pay your balance in full each month on an American Express card. Diners Club is similar, but it gives you two months to pay without incurring penalties (which is designed to appeal to travelers who take long trips).
Both travel card providers also offer many of their customers year-end summaries of their charges, which can be useful at tax time, when tallying travel and entertainment expenses.
Unlike bank cards and travel and entertainment cards, which can be used in a variety of businesses and locations, house cards can be used only at a specific chain of stores.
Major issuers of house cards include:
department stores (Sears is the biggest issuer of house cards, overall);
oil and gasoline companies; and
telephone companies.
And then there are specialty cards, like the one you can get at your local tire center.
Like travel and entertainment cards, most house cards come with the same terms and conditions, regardless of where you apply. Like bank cards, most house cards are revolving accounts, so you do not have to pay your bill in full each month.
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