How Do Credit Cards Work: A Guide for Beginners

CELEBZ NET WORTH

Credit cards play a vital role in building credit scores and creditworthiness. In addition, it earns you redeemable points, cashback,  or miles.

We all know how to swipe, tab, or dip the plastic money to pay for daily purchases, but how do credit cards work?

Various products are available based on consumer types, credit history, reward structure, card network, and many other features.

How Different Types of Credit Cards Work

Secured credit cards work like debit cards, where your credit limit depends on your security deposit. The security deposit acts as collateral for the credit.

How Do Secured Credit  Cards Work?

The credit card issuer determines the amount of cashback and qualifying purchases. Depending on the card, a general cashback ranges from 1% to 2%.

How Do Cashback Credit Cards Work?

Besides regular cashback, miles, or points, they’ll have additional perks on purchases at the co-branded merchants.

How Do Co-Branded Credit Cards Work?

Travel credit cards offer points or miles for all eligible purchases. The accumulated miles or points can offset travel-related expenses through a statement credit.

How Do Travel Credit  Cards Work?

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