When it comes to picking a payment network, consumers have to research the differences between them in order to make the right choice. Visa and MasterCard are payment networks that function in similar ways. Discover Card is a little bit different, offering cash-back bonuses. American Express is also an entity with unique offerings for consumers that are different than the mainstream.

When it comes to credit cards, issuing banks and their payment networks are aplenty, giving consumers a myriad of companies to choose from. Unlike what many people think, payment networks like American Express, Discover, MasterCard, and Visa are not the ones that actually offer the credit cards. It’s generally issuing banks, credit unions, or other financial institutions that offer the credit.

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It is the bank, credit union, or financial institution that sets the specific terms of the card, including the interest rate. This means that consumers can have two Visas or two MasterCards with extremely different terms and rates. When payments are not made, it is the credit card issuer that takes the hit, so to speak.

Visa and MasterCard are the main payment networks. They are computer systems that basically process credit card transactions. Both networks provide cardholders with a variety of benefits and will not seem very different in the way they work. Benefits of having a Visa or MasterCard lies in the ability to charge back damaged merchandise. They also set caps on limited liability if one of their cards is lost of stolen. Both Visa and MasterCard credit cards are widely accepted in more than 150 countries, by more than 20 million merchants.

The Discover Card works a little bit differently than Visa and MasterCard. Like the two popular cards, Discover is widely accepted around the world. One feature of Discover Cards is the cash-back bonus offered, calculated as a percentage of purchases. Discover Cards are issued through their own banking entity, namely the Discover Bank.

Stranger yet is the American Express card, which functions in its own, unique manner. American Express has, over time, built a reputation as an “exclusive lender” for specially selected clients rather than the average, everyday consumer. Initially dealing with only charge cards where accounts had to be paid of in full every month, American Express has now also runs a payment network. In addition to issuing its own cards, the company now partners with other issuing banks and has joined the credit card industry. American Express customers are now able to carry a balance.

When consumers are ready to select the type of card to carry, some questions to consider include:

• Will a balance be carried from month to month?
• What is the interest rate, or APR?
• What is the card’s grace period?
• Is there an annual fee or other fees?
• What is the spending limit?
• Does the credit card offer rewards?

No matter which card type is selected, consumers must commit to using them appropriately so they can begin to build a positive credit history.