Choosing a Credit Card
Learning Goals/Objectives:
There are thousands of choices when it comes to credit cards. Each is designed for a particular type of credit user. Banks and other institutions compete through different interest rates, different kinds of rewards, various membership fees and member benefits, and relationships with groups.
This lesson uses a web resource created by CreditCards.Com to compare the costs and benefits of credit cards offered by a variety of financial institutions.
Link: www.creditcards.com
Overview:
Background Information
Below are listed the various types of credit cards offered by many financial institutions. The CreditCard.Com web page lists several options of reach type. The general descriptions of the types of cards are listed at the top of each page.
• Low Interest Credit Cards
Credit cards with a 0% introductory APR or low fixed rate offers.
• Balance Transfer Cards
Transfer a high interest balance onto a low APR credit card.
• Rewards Credit Cards
Credit cards that "reward" you for your purchases with perks or products.
• Cash Back Credit Cards
Credit cards that allow you to earn cash back on your purchases
• Airline Credit Cards
Earn frequent flyer miles with an airline credit card.
• Instant Approval Cards
Get approved instantly on select credit cards from merchants or banks.
• Prepaid & Debit Cards
Cashless spending with debit cards, prepaid debit or credit cards.
• Credit Cards for Bad Credit
Cards for people with poor credit or less than perfect credit, with restrictions.
• Student Credit Cards
Credit cards for high school and college students – often co-signed by a parent.
• Business Credit Cards
Cards for corporate use or for small-business owners.
- 0% APR Credit Cards
Credit cards with 0% APR for 6 - 12 months on purchases or balance transfers.
In addition to the types of credit cards listed by CreditCard.Com, some cards are offered as “Affinity Credit Cards.” These cards pay a percentage of the interest to non-profit organizations, schools, worthy causes, etc. For instance, your card may offer some percentage of the total interest paid to an environmental organization you support.
Activities:
1. Ask students to suggest the criteria they might use to compare credit card offers. The list may (should) include the following:
- Interest rate
- Grace period
- Annual fee
- Over-limit and other fees
- Rewards (cash back, airline miles, etc.)
- Affinity to an organization
2. Ask students to suggest which people might be interested in these criteria.
- Interest rate – those who carry a balance each month.
- Grace period – those who pay the total balance each month.
- Annual fee – Those who use a card often - or use one very little.
- Over-limit and other fees – those who do not like or want to avid fees.
- Rewards (cash back, airline miles, etc.) – single card users.
- Affinity to an organization – graduates or those who support causes.
3. Assign small groups of students to each type of credit card included on the CreditCard.Com web site. Print out the lists of card offers for each category or provide a computer with Internet access to each group. www.creditcards.com
CreditCard.Com links to the types of credit cards.
- Low Interest Credit Cards
- Balance Transfer Cards
- Rewards Credit Cards
- Cash Back Credit Cards
- Airline Credit Cards
- Instant Approval Cards
- Prepaid & Debit Cards
- Credit Cards for Bad Credit
- Student Credit Cards
- Business Credit Cards
- 0% APR Credit Cards
4. CreditCard.Com also has links to compare credit card offers based on the credit applicant’s credit rating or credit history. See the list in the left column on the CreditCard.Com home web page. The categories are:
• Excellent Credit
• Good Credit
• Fair Credit
• Bad Credit
• Limited or No Credit History
• Not Sure?
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