gold & platinum cards

These are credit cards offered to those who are considered a good credit risk, with a higher salary usually above £20,000 or £25,000.

They generally offer a higher credit limit, a larger daily cash withdrawal limit and other additional benefits such as travel insurance, extended warranties for household appliances, medical insurance, card protection and hotel savings.

To some they also provide a status symbol.

donation cards

Each time the card is used the card issuers makes a small donation to a charitable cause, at no additional cost to the card holder.

The 'charitable cause' includes recognised charities such as Oxfam, as well as football clubs, universities and many other organisations.

store cards

These cards are issued by a shop/retail chain and can only be used in the shop/retail chain that issued them. On average they charge a higher rate of interest than regular credit cards and should be avoided unless you are able to pay off the outstanding balance each month.

A recent NOP survey revealed that 75% of store card holders had no idea of the interest rate being charged on their store card, despite only one in three repaying their balance in full each month.

However, they can be useful if the store does not take any other credit cards and can offer benefits such as discounts exclusive to card holders. Some stores also restrict the first few hours or the first day of their New Year's sales to card holders only.

charge cards

These cards provide an 'account' against which withdrawals can be made to make purchases. The outstanding balance must be paid in full each month or heavy penalties are incurred.

They are a form of credit/debit card hybrid which can be used in the same way as a regular credit card. An annual fee is normally charged which can cost over £100.

American Express and Diners Club are the best known charge cards. In fact, other than these two companies, charge cards are only offered by banks to their existing customers.

Charge cards usually offer additional incentives such as insurance, air miles and/or reward points.

To some they provide a status symbol, especially the American Express Centurion Black Card. This charge card is offered by invitation to the very, very wealthy. It offers unlimited free credit although the outstanding balance must be paid in full each month.

company cards (business cards)

These are charge cards issued to companies. Cards are issued to chosen members of staff and monthly statements are sent to both the card holder and the company. This allows the company to track and analyse company expenditure.

The card can be linked to a current account so that payment is automatically made each month.


The future...

smart cards

Smart cards are the next generation of plastic payment. The information is held on a small micro chip embedded in the card, rather than on a magnetic strip.

A micro chip can hold eighty times more information than a magnetic strip, and this additional capacity can provide new functionality. For example, one card could become multifunctional and serve as a credit card, debit card and 'electronic wallet'.

The use of a chip should also reduce fraud because not only are chips more expensive and difficult to counterfeit, but in the future additional fraud prevention techniques could be introduced such as fingerprint recognition and retina scanning technologies.

Micro chips will appear in more and more UK credit cards over the next few years, but micro chips and magnet strip technology will co-exist for the foreseeable future due to the logistics involved in changing all the cash machines and retailer terminals.