8 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.
1. 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.
- 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.
2. Travel Rewards Credit Cards
If you travel a lot, you might want to look into 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 a travel rewards 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 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 travel rewards cards are branded jointly by 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.
3. Secured Credit Cards
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 if you use your card responsibly.
You can help build credit with the 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.
4. 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.
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, for example—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.
5. 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 credit cards do.
And how you earn rewards can vary. 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 score.
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 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.
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 introductory period. But keep in mind that a balance transfer could come with fees. And that could impact any potential savings.
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 intro rate expires, the standard APR kicks in. And the standard APR won’t just apply to any future balances on the card. If you’re carrying a balance when the intro rate expires, the standard APR will apply to your current balance too.
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. Store Credit Cards
Store credit cards work a lot like other types of credit cards. And, as the Consumer Financial Protection Bureau 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 only at the store or group of stores affiliated with the card.
- Co-branded general purpose: Like traditional credit cards, these can be used outside the store or group of stores affiliated with the card.
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.
Choosing the Type of Card That Works for You Before You Apply
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 you even apply. It’s quick and won’t hurt your credit score.
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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.