Most of us have credit cards, yet very few people understand the different types of credit cards available. Before you sign up for another credit card offer, make sure you know what you’re getting yourself into. Here are three common types of credit cards and their important details. Arm yourself with information so you know exactly how your credit cards work.

A revolving credit card is the type you’ll get most often when you apply for a credit card. It can also be called open credit card or an unsecured credit card. Simply put, revolving credit means that you’re allotted a credit limit and are allowed to make charges within that credit limit. Each month, you’ll have a minimum amount due on the credit card but you can pay more if you like.

A revolving credit card will charge interest on your existing balance. The interest charges are added to your balance and need to be paid off as well. This is where a lot of people can get into trouble. High interest rates mean that you’ll be paying more than you actually spend in the long run. The higher the interest rate, the more you’ll end up paying.

Prepaid credit cards are another popular type of credit cards, although they also go by the name secured credit cards. They differ from revolving credit cards in that you need to put up some money to back your purchases. Instead of the credit card company lending you money, you’ll be borrowing against money you’ve already paid. Prepaid cards are common in bad credit situations. It’s low risk for the credit card company. They are a helpful way for you to build your credit rating, since your activity on the card is reported to credit bureaus.

You’ll still need to make monthly payments on your credit card, as you would with a revolving credit card. With timely payments to your prepaid credit card, your credit card company may change the status of your card to a revolving credit card. In this case, they will increase your credit limit beyond the amount that you paid as collateral.

With prepaid cards, you’ll still be subject to the late fees, credit card interest and other features of regular credit cards. Make sure to pay on time and keep your spending low or you’ll end up making your credit score worse.

Another common type of credit card is a rewards credit cards. These cards are technically revolving credit cards, but they have extra benefits. The spending that you do on these types of cards will help you earn free airline miles, extra cash back or a variety of other benefits.

Rewards credit cards can be beneficial to you, but only if you use them wisely. It’s very important that you read all of the terms and conditions of your rewards program so that you can be sure you’re following the system correctly. Sometimes people think they are building up rewards with the credit card, when really they are missing one vital piece of information that prevents them from earning.

These three basic types of credit card are offered by many different credit card companies. There are also other types of credit cards available. Before you get a new credit card, make sure you know what type you are getting. In addition, if you already have credit cards, make sure you know exactly what type of credit cards you have. This way, you can be sure to use them wisely.