Types of Credit Cards to Apply For

There are several different types of credit cards—which one is right for you?

With so many credit cards available, how do you pick the one that’s right for you? When you start to compare credit cards, the combinations of features, perks and conditions can be overwhelming.

Before you pick a specific card, it’s helpful to understand the different types of credit cards that are available. How do they match up to your credit score, your needs and the kinds of rewards you want to earn? And what are the fees, interest rates and other charges associated with each type of card? This guide to credit card types can help you get started.

Cash Back Credit Cards

Depending on the card, cash back credit cards may reward everyday spending on things like groceries, gas, dining and entertainment. For every qualifying purchase, you earn back a percentage of what you spend.

Some of the ways you might be able to redeem your cash back include

  • Statement credits.
  • Checks.
  • Gift cards.

There are a couple of different types of cash back credit cards to choose from:

  • Flat-rate cards offer the same reward rate for all purchases. 
  • Category-earn cards may offer higher rewards when you use them for particular things, like restaurant bills or groceries. 

Travel Rewards Credit Cards

If you travel a lot, you might want to look into a travel credit card. When you use a travel credit card to make purchases, you may earn rewards that can be redeemed in different travel-related ways.

You might not have to use your card to only make travel purchases, though. Depending on the card, travel purchases typically earn you the most rewards. But some travel cards offer good rewards rates on general purchases.

There are two main types of travel credit cards:

  • General travel cards aren’t associated with any particular airline or hotel. This may give you more freedom to choose how to redeem your rewards. For example, you could earn “miles” toward a future flight. Or you could redeem points for perks, like vacation rentals.
  • Co-branded cards are branded jointly with the card issuer and the merchant—usually a specific airline or hotel. You can use the card as normal, but any rewards earned are generally redeemable only with that specific airline or hotel chain.

Secured Credit Cards

A good credit score is important in qualifying for a credit card. If you’re new to credit or building it, applying for a secured credit card may be an option. 

So how do they work? You put down a security deposit that’s held by the card’s issuer as collateral. You can then use the card to make purchases just like you do with any other card. And you might even get your deposit back. You could earn back your deposit as a statement credit by using your card responsibly. Or it could be refunded when you close your account and pay your balance in full.

You can help build credit with responsible use of a credit card. But if you’re approved for any card and don’t use it wisely, it could have a negative impact on your credit. With any card, it’s best to pay your bill in full and on time every month. It’s difficult to build a good credit history if you wind up missing payments.

Student Credit Cards

A student credit card can do much more than offer a line of credit to someone in college. You can also use it responsibly to help build credit history and encourage financial independence if this is all new to you.

Student credit cards work in a similar way to other types of cards. They’re just more tailored to the college crowd. For example:

  • They may be easier to qualify for. Many student credit cards have more relaxed credit requirements.
  • They may offer more relevant benefits. You might not care about earning a flight upgrade, but earning 1% unlimited cash back—that could come in handy.

Getting a student credit card isn’t a decision to make lightly, though. You may be able to help protect yourself from the potential pitfalls of credit if you follow these tips for using credit cards responsibly

Business Credit Cards

You don’t need to be in charge of a multinational corporation to qualify for a business credit card. They can be useful to many types of businesses, whether you’re opening the coffee shop of your dreams or doing a bit of freelancing on the side.

Business credit cards can help you keep your business and personal expenses separate. This may make things easier when it comes to doing your taxes. And they often offer higher credit limits than consumer cards do. 

And how you earn rewards can vary. Some business cards offer a flat rewards rate for all purchases. Others have higher rewards for business-related purchases like travel or office supplies. 

Plus, there are often other perks that come with a business card:

  • Employee spending tracking and management
  • Travel and emergency assistance
  • Cell phone and rental car insurance
  • Discounts with a selected list of merchants
  • Additional cards for your employees to use

If your business card reports to the business bureaus, responsible use of it can help you build your business credit. But keep in mind that if there’s any unpaid debt, you could be held accountable—no matter which employee did the spending. If your business card also reports to the consumer bureaus, that can also affect your personal credit score.

Credit Cards With No Annual Fee

There are lots of good credit cards offering rewards and perks that don’t come with an annual fee. For example, the Capital One SavorOne card offers unlimited 3% cash back on dining and entertainment.

“No annual fee” doesn’t mean your card is free. It just means you won’t be charged a fixed annual membership fee simply for the convenience of having it. You could still pay other rates and fees depending on how you use the card. These could include interest and finance charges.

Credit Cards With a Low Intro Rate

Some credit cards offer low or 0% introductory rates that apply to purchases. These can be useful if you’re planning to make a big one-off purchase and then pay it back quickly. 

Others offer the rate to transfer a balance or to consolidate debt. And many offer the low rate for both.

If you’re carrying a balance, transferring it to a card with a lower or 0% introductory interest rate could actually help you pay less in interest if you use the card responsibly and pay the balance during the promotional period.  

By law, intro rates must last at least six months. During that time, you can focus on paying down your account balance. That’s because, depending on the promotional rate, you may not have to pay much—or any—interest for that period.

Keep in mind though, there could be a fee associated with a balance transfer. Be sure to check the card’s offer terms.

When the intro rate expires, the standard APR kicks in. And depending on your card’s terms and conditions, it could kick in early if you are late with payments or if you exceed your credit limit.

Ready to Apply for a Credit Card?

Once you’ve picked the type of credit card that works for your budget and goals, the next step is deciding which specific card to choose. 

Capital One has a useful credit card comparison tool that helps you search by credit requirements, rewards type and other factors to find the right credit card for you.

And with pre-approval from Capital One, you can find out if you’re pre-approved for a credit card before you even apply. It’s quick and won’t hurt your credit score.

Learn more about Capital One’s response to COVID-19 and resources available to customers. For information about COVID-19, head over to the Centers for Disease Control and Prevention

Government and private relief efforts vary by location and may have changed since this article was published. Consult a financial adviser or the relevant government agencies and private lenders for the most current information.

We hope you found this helpful. Our content is not intended to provide legal, investment or financial advice or to indicate that a particular Capital One product or service is available or right for you. For specific advice about your unique circumstances, consider talking with a qualified professional.

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