10 different types of credit cards

With so many credit cards available, how do you pick the one that’s right for you?

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 scores, 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.

Key takeaways

  • There are many types of credit cards, including cash back cards, travel cards, student cards and secured cards.
  • Understanding the different types of credit cards can help you explore your options and decide which might be a good fit for you.
  • Applying for new credit can temporarily affect your credit scores. But using a pre-approval tool could help you predict your eligibility.

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10 different types of credit cards to consider

Not sure which credit card is right for you? Consider some of the most common credit cards available today:

1. Cash back credit cards

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

Some ways you might be able to redeem your cash back rewards include statement credits, checks and gift cards. You may also be able to choose from a few different types of cash back credit cards. Two of the most common are: 

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

2. Travel rewards credit cards

If you travel a lot, you may consider a travel rewards 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 be able to use this credit card to earn rewards on purchases that aren’t travel related too. For example, some travel rewards cards might offer the same rewards rate on all purchases. Others might offer a higher rewards rate for travel-related purchases.

There are two main types of travel rewards credit cards:

  • General travel rewards cards: These 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 rewards miles toward a future flight. Or you could redeem points for perks, like vacation rentals.
  • Co-branded travel rewards cards: These cards are branded jointly by the credit card issuer and the merchant—usually a specific airline or hotel. You can use this type of card as normal, but any rewards earned are generally redeemable only with that specific airline or hotel chain.

3. Store credit cards

Store credit cards work a lot like other types of credit cards, though they’re affiliated with a specific store. And as the Consumer Financial Protection Bureau (CFPB) explains, “These cards typically provide additional discounts and frequent shopper rewards when used exclusively at their stores or with affiliate retailers.”

There are two types of store credit cards:

  • Private label: These can usually be used at the store or specified store affiliates. 
  • Co-branded general purpose: Like traditional credit cards, these can typically be used anywhere—even outside of the store and its affiliates. 

Store cards—like other credit cards—can be a great financial tool when used responsibly. And they can offer discounts, benefits and access to experiences that are exclusive to cardholders.

4. Secured credit cards

Since credit scores can be an important factor for credit card qualification, applying for a secured credit card may be an option to help build your credit. Some secured cards even offer rewards.

So how do secured credit cards work? Unlike unsecured cards, you put down a security deposit that the card issuer holds as collateral. You can then use the card to make purchases just like you do with any other card option. And you might even get your deposit back if you use your card responsibly.

5. 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 your credit history.

Student credit cards work in a way that is similar to how other types of cards work. 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 cash back could come in handy.

If you’re just starting out with credit, check out these tips for using credit cards responsibly.

6. 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.

“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 having the card. You could still pay other credit card fees, as well as interest and finance charges, depending on how you use the card.

7. Credit cards with low or 0% APR intro rates

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.

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.

When the introductory annual percentage rate (APR) expires, the standard APR kicks in. The standard APR will apply to both future card balances and your current balance if you carry one over. 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.

8. Balance transfer credit cards

When you transfer a credit card balance, you move an existing balance from one card to another—ideally at a lower interest rate. But keep in mind that most issuers don’t let you transfer balances from one card to another. 

If you’re carrying a credit card balance, transferring it to a card with a lower or 0% introductory interest rate could help you pay less interest—if you use the card responsibly and pay the balance during the introductory period. It could also help you consolidate debt or combine multiple balances into one, which could simplify payments.

But keep in mind that a balance transfer could come with fees. According to the CFPB, balance transfer fees are typically a percentage of the amount you transferred or a fixed amount—whichever is higher. And that fee could impact any potential savings. 

9. Business credit cards

Whether you’re opening the coffee shop of your dreams or doing a bit of freelancing on the side, a business credit card can be useful to many types of businesses.

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 credit cards do. 

And how you earn rewards can vary from other types of credit cards. For example, some business credit cards offer a flat rewards rate for all purchases. Others might have higher rewards for business-related purchases like travel or office supplies. 

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

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

If your issuer reports your business credit card to the business bureaus, responsible use of it can help you build your business credit. And if your issuer also reports your business credit card to the consumer bureaus and you’re personally responsible for the account, that can also affect your personal credit scores.

10. Charge cards 

Charge cards function similarly to credit cards. But unlike a credit card, charge cards don’t usually come with a set spending limit. Instead, charge accounts are often approved based on your financial history and your spending and payment habits. But they typically assess a fee to use the card.

Cardholders typically have to repay the balance on a charge card in full each month or when they get their statement. That means balances aren’t carried or rolled over into the next month. Missing payments could mean late fees or other penalties.

How to choose the best type of credit card for you

Now that you’re familiar with some of the most common types of credit cards, how do you choose the best credit card for your needs? Here are a few things to think about before submitting an application:

1. Consider your credit scores

Your credit history could play a role in which cards you qualify for. Typically, applicants with higher credit scores qualify for better terms, such as higher spending limits, lower interest rates and better rewards. 

There are some cards that may work better for applicants with fair credit or those with no credit history. So if you’re working to improve your scores, you may focus your search on other types of cards, like a credit building card or a secured credit card.

2. Determine your goals

What do you want out of your new credit card? If credit card debt consolidation is your goal, you may consider a balance transfer card with a low or 0% intro APR. Just remember, promotional rates eventually expire.

If you’re interested in earning points or cash back on everyday purchases, then a card with a rewards program may be more appealing. Keep these financial goals in mind when comparing cards so you can find the best option for you.

3. Understand card costs 

Some cards come with annual fees. Missing payments or exceeding credit limits could result in fees or penalties. But those are avoidable with responsible use. Be sure you understand how credit cards work and any potential fees before you apply. 

4. Compare your options

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 whether you’re pre-approved for a credit card before applying. It’s quick and won’t hurt your credit scores.

In a nutshell: Types of credit cards

Finding the right credit card—whether it’s a travel rewards card, cash back credit card or a student credit card—can take time, patience and some research. Take some time to review your credit, compare card costs and find a card that offers benefits that work for you. Getting familiar with the different types of cards and how they work can help you find the best credit card for you.

When you’re ready, consider getting pre-approved for a credit card as it can help you narrow down your search without impacting your credit. Find out how you can get pre-approved by Capital One today.

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.

Capital One does not provide, endorse or guarantee any third-party product, service, information, or recommendation listed above. The third parties listed are solely responsible for their products and services, and all trademarks listed are the property of their respective owners.

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