Whether in business or online: …credit cards have become an integral part of our lives. Only which credit card is the right one and how do credit cards work? Anyone who has not yet owned a credit card or has not studied the subject in depth will quickly find that a credit card comparison can be confusing. At oneword.co.uk you can find out what you need to know to find the right credit card for you.
The different credit card types
At the beginning of a credit card comparison, the fact that there are different card variants should be considered first. A distinction is made between “real” credit cards, prepaid credit cards and so-called debit credit cards.
The classic credit card:
A normal or “real” credit card grants the cardholder credit. The amount of the credit limit is agreed individually and depends on creditworthiness. A characteristic feature of this type of credit card is that the outstanding balance is either repaid at the end of an accounting period (usually monthly) collectively or in instalments. These can be either fixed installments or, for example, 5% of the total amount.
The prepaid credit card:
The principle of the prepaid credit card corresponds to that of the prepaid SIM card for mobile phones. It is therefore not a credit card in the true sense of the word. The card is topped up with a certain credit balance in advance. This can be done in different ways depending on the issuing bank, but usually by bank transfer, payment at the service terminal or by using various Internet payment providers (e.g. PayPal). It can then be used to pay or withdraw cash almost anywhere.
Attention: A major disadvantage of this card variant, which should be taken into account when comparing credit cards, is that many car rental companies and online travel portals do not accept it. Such prepaid credit cards are not bound to a person and therefore do not offer any security. Such companies often require a classic card with an available credit line, for example to block a rental car deposit.
The debit credit card:
This variant is also not a credit card in the “classic” sense. The debit principle is the same as for the giro card (formerly EC card) of the current account. After paying with this card, the outstanding amount is immediately deducted from your reference account. A proper credit line is not granted here. Please note: This type of credit card is also sometimes not accepted by car rental companies, airlines, travel agencies, etc. However, the probability is much higher than with prepaid credit cards, as this is personal.
Basic advantages and disadvantages of a credit card
You have now gained an overview of the different types of credit cards. Next step in the credit card comparison: to become aware of the advantages and disadvantages of credit cards.
A credit card offers its holder many possibilities, such as rental car bookings (which are now difficult to make without a credit card), participation in bonus programs (e.g. Miles&More, Payback, fuel discounts, etc.) or financial flexibility. These are undisputed clear advantages. However, it should also be remembered that you may quickly lose track of your spending. This risk can be avoided with a prepaid or debit credit card, but with the disadvantages already mentioned.
Many banks – different services. A credit card comparison is worthwhile!
The last step in credit card comparison: VISA, Mastercard or American Express? House bank or direct bank? During your credit card comparison you cannot avoid these decisions. The question whether you prefer a VISA card or a Mastercard, for example, is of secondary importance. In terms of (worldwide) acceptance, they don’t take much notice, the decision should be made much more dependent on the offer of the issuing institution.
For the right credit card you should therefore give priority to the following question: Which additional services are useful for you?
If you travel frequently, it is advisable to use a card that includes travel insurance, allows you to withdraw cash free of charge/pay with the card (e.g. outside the EU) or credits air miles when you make purchases abroad.
If you are interested in participating in a bonus program of a particular company, it is best to choose a card that offers this. Many companies now offer credit cards in cooperation with banks, which automatically collect bonus points in the corresponding program when you make payments. For people who travel a lot by car, a card with fuel discounts or refunds on petrol station payments can be worthwhile.
As with all banking transactions, don’t forget to pay attention to the costs involved. If you make an intensive comparison for the right credit card, you will find that the annual fees of the cards vary greatly, from free of charge to several hundred euros. You should also pay attention to the amount of interest that is charged.
Benefit from the best services with a credit card comparison
As already mentioned, nowadays it is almost impossible to get by without a credit card. In the end, the only important thing is that you find the right card. There is a wide range of cards on offer, but if you set your priorities according to the explanations above, you will easily find the right card.
Whether you’re looking for your first credit card or want to add another card to your wallet, an intensive credit card comparison can not only save you money in the form of fees, a credit card comparison can also bring you benefits in the form of bonus points, miles or other advantages.