There are basically three types of credit cards:
- Bank cards, issued by banks (for example, Visa, MasterCard and Discover Card)
- Travel and entertainment (T&E;) cards, such as American Express and Diners Club
- House cards that are good only in one chain of stores (Sears is the biggest one of these, followed by the oil companies, phone companies and local department stores.) T&E; cards and national house cards have the same terms and conditions wherever you apply.
You may also be familiar with what is known as an affinity card. This card -- typically a MasterCard or Visa -- carries the logo of an organization in addition to the lender's emblem. Usually, these cardholders derive some benefit from using the card -- maybe frequent-flyer miles or points toward merchandise. The organization solicits its members to get cards, with the idea of keeping the group's name in front of the cardholder. In addition to establishing brand loyalty, the organization receives some financial incentive (a fraction of the annual fee or the finance charge, or some small amount per transaction, or a combination of these) from the credit-card company.
No one card is right for everyone. Basically, the right card for you is one that's accepted where you shop and charges you the smallest amount of money for the services you use. Almost any U.S. business or establishment that takes MasterCard also takes Visa, and vice versa. So if you only spend money in the United States, you probably don't need both.