There are many different types of credit cards available to you, and it can be difficult to know which are the best credit cards for migrants. Let’s look at some of the most common credit card types so that you understand each one when it comes time to apply for a credit card.
1. Rewards Credit Card
Rewards cards are point-based and offer a predetermined rate of points per dollar amount you spend. For example, some rewards cards in Europe might offer 1 point for every 1$, or some might offer bonus points for specific categories of spending, like food or gas. Points can then be redeemed for things like flights, hotels, merchandise, restaurants, and more.
2. Cash Back Credit Card
A cashback card works like a rewards card, except instead of earning points on your purchases, you earn a predetermined amount in cashback. Here too, you might earn higher amounts of cashback on certain spending categories. If you don’t want to trade in points for rewards, then getting a cashback card in Europe can be a great way to earn money while you spend.
3. Travel Credit Card
Like a rewards card, a travel credit card allows you to earn points that can be redeemed for travel-specific rewards, such as hotel stays, flights, or car rentals. Some of them also offer extra benefits like airport lounge access, preferred international exchange rates, or free or discounted international ATM withdrawals.
4. Balance Transfer Credit Card
It’s no secret that overusing credit cards can lead to debt, but balance transfer cards allow you to minimize the interest fees you pay on that debt. If you have debt on one or more credit cards at a high-interest rate, you can move the balance to a balance transfer card so that you can slowly pay off all your debt at a lower interest rate.
5. Money Transfer Credit Card
Money transfer cards allow you to “borrow” funds so that you can send money from your credit card to a bank account. This is helpful if you’re in a bind and your bank account is in overdraft and need immediate funds in your account.
6. Interest-free or Low-interest Credit Cards
Some credit cards offer new customers a promotion of a low-interest fee or zero interest altogether. Typically, this offer will be valid for a set period of time, such as the first 3, 6, or 12 months after you get your new card, and then the interest rate will revert back to the card’s standard.
7. Virtual Credit Card
A virtual or digital credit card functions the same as any other type of credit card, except it’s not physical. You’ll still get a 16 digit credit card number, but instead of swiping your card physically, it exists only virtually. A virtual credit card is most common with online-only digital banks, and you can still use it for almost any type of payment. Some providers, like Rewire, offer a debit card that can be both virtual and physical, giving you more options when it comes to how you want to spend your money.
8. Charge Credit Card
Charge cards function mostly like credit cards in that you can use it to make a purchase, your card issuer pays for that purchase, and then you pay back the issuer. The main difference is that the balance needs to be paid off in full in a short period, usually a month, rather than being able to carry a balance over with interest like on a regular credit card.
9. Prepaid Credit Card
A prepaid card can be used in the same ways as a credit card to make purchases, however, instead of using it and then paying off the balance later, a balance is preloaded to the card and then gets used to make purchases. It’s similar to a debit card in that the money is withdrawn from the card right away, but gives you the option of using a credit card if you’re making a purchase where you can’t use debit.
10. Secured Credit Card
A secured credit card uses a deposit in order to make purchases. It’s often used to rebuild credit. In order to get a secured card, you need to send the issuer a deposit, let’s say $1,000, and that becomes your credit limit. Each month you pay off your balance, you then have that $1,000 available to spend again.
11. Unsecured Credit Card
An unsecured credit card is essentially any other type of credit card that doesn’t require a deposit to use. A lender doesn’t have any type of collateral to ensure you’ll pay off your balance, they’ll just assume that you’ll pay it each month.`
How to Know Which Card to Choose?
When it comes to choosing the best credit cards for migrants, you’ll need to assess your individual needs. A travel rewards card can come in handy if you expect you’ll need to fly home often and want to rack up flight points. On the other hand, a cash back card can help you earn money on your purchases so you can save more. Also, a secured credit card can help you build credit in a new country where you don’t have a credit history. But, if you’re not after a credit card and you simply want a secure way to spend your money while you’re abroad and have the ability to shop online, Rewire offers a debit card specifically for migrants in Europe.