Visa, MasterCard, prepaid, fees, interest rates and countless advantages and disadvantages: If you've lost your way in the jungle of credit card issuers so far, you're probably not alone. In this guide, you will learn which features you should compare before purchasing a credit card and how you can then find the right card for you.

The different types of credit cards

First of all, you should be aware that there is not just "the one credit card". The different types are divided into different categories, which in technical language go by names such as debit, charge and prepaid card. The characteristics of these three card types - they are the most widely used card variants in the US- are as follows:

Prepaid credit cards

This credit card works similar to the phone cards known from mobile phone circles. You load your credit card - usually directly by bank transfer - and can then freely dispose of the transferred amount. These credit cards are especially interesting for younger people, since no over-indebtedness is possible. For example, if you rarely need a credit card, but go on vacation abroad every now and then, you are well advised to use such a prepaid credit card. These cards are also available for people with negative Schufa entries.

Charge credit cards

This variant corresponds to the usual mode of operation of credit cards: you make purchases and pay without cash, while you receive the bill for all transactions from your credit institution at a later date - often at the end or beginning of the month. So you don't have to have the funds at the time of purchase to be able to afford it. Overall, this type of credit card is very convenient, but at the same time a little caution applies, because theoretically you could spend more money than you actually have - debt would be the result.

Debit credit cards

Here, the credit card works similar to a debit card: as soon as you buy something or perhaps pay in a restaurant, your bank account is charged immediately or promptly. So, unlike the charge credit card, you cannot make purchases if your account is not funded. However, one advantage of this credit card is the fact that usually even people with limited financial resources - pupils, students and similar groups - can get a debit credit card. Accidental over-indebtedness is virtually eliminated, as with the prepaid card.

If you've never had a credit card before, you'll probably want to choose between these three types of cards.

Which credit card issuer should I trust?

There are three major providers in the US: VISA, MasterCard and American Express. Since countless companies and banks now issue their own credit cards, it may give you the impression that you have to choose between a veritable flood of card issuers. In principle, however, these companies only individualize a MasterCard credit card, for example, by printing their own company logo and attaching additional conditions to the card. However, the payment service provider behind pretty much all cards is always VISA, MasterCard or American Express. Smaller exceptions like JCB or Diners Club prove the rule.

So make your decision regarding the issuer of the card primarily based on features such as acceptance. VISA and MasterCard both have a total of about 25 million acceptance points around the world, and in the US there are about 500,000. In other words, you probably can't go wrong with either of these card types anywhere a credit card is accepted. American Express and smaller companies like Diners Club, on the other hand, are aimed at a high-turnover clientele, to which most credit card holders do not belong, however - accordingly, lower acceptance is the result.

The basic fees

In many cases, carrying a credit card is not free of charge and therefore cannot be compared to an ordinary debit card. However, the nature of the fees differs from credit institution to credit institution, so in these cases you have to read the fine print yourself. Basically, if the card cannot be carried free of charge, the fees differ as follows:

Annual fee: some companies require a payment of - usually - ten to 20 dollar per year to allow you to use the credit card. You then usually do not have to worry about further conditions.

Monthly or annual minimum purchase: in order to be allowed to use the credit card free of charge, in some, few cases you will have to achieve a minimum monthly purchase. If you are confident that you will meet this sales goal without making "forced purchases," this is a reasonable choice.

Additional fees when using the credit card

If you use your credit card exclusively in the US, there are usually no further costs for financial transactions. Many issuers also want to "lure" their customers and still give out special bonuses when paying by credit card. However, the situation changes significantly when you pay with your credit card abroad: Especially on vacation, the use of credit cards is actually a good idea, because cash can thus not be stolen and a small plastic card can be transported under all circumstances. However, many credit institutions charge additional fees when paying abroad.

Since these are usually percentage-based, these fees can be quite high, depending on the amount of the transaction. Also of disadvantage is withdrawing cash from ATMs, as this is often subject to fees. This foreign transaction fee, as it is also referred to in technical jargon, also differs in amount between institutions. Especially if you often travel abroad on business, you should inform yourself comprehensively about these foreign fees before purchasing a credit card.

Special credit cards for high demands

In addition to normal credit cards, you have probably heard of gold or platinum credit cards. The example of American Express makes it clear whether this has advantages or disadvantages for you: the gold variant of the credit card costs 140 dollar per year. With the platinum variant, this contribution amounts to 600 dollar per year - so it is no small sum.

As compensation, you get, for example, participation in a bonus program, insurance for possible travel cancellation or illness abroad, round-the-clock telephone service and many other rewards. This is where you have to decide if investing in such a card is worth it for these rewards. In most cases, however, private users are likely to make a losing deal with this type of credit card, and reaching for a "normal" card is almost always preferable. However, those who travel a lot are welcome to take a look at the expensive premium cards.

Conclusion

You should now have a fairly accurate picture of what type of credit card best suits your needs. All questions could certainly not be clarified in this article, because many variables now also depend on your chosen credit institution. Nevertheless, it should now be much easier for you not to get lost in the jungle of credit cards. You can find an overview of all offers in our credit card comparison - here you can also limit your search to prepaid or debit cards, for example.