What Are the Different Types of Credit Cards?

If you’re at the beginning of your search for a credit card, you may be overwhelmed by the hundreds of card offers available online. One of the best ways to whittle down your options is to identify why you are looking for a credit card and figure out the type of credit card that’s best for you. For example: Are you looking to build a credit history? Look for a credit card for building credit. Are you aiming to earn free flights or hotel stays? You should focus on travel credit cards.

Some of the main types of credit cards include cash back, travel, balance transfer, business and more. Many types of credit credit cards overlap. A cash back credit card may also have a 0% introductory APR for purchases or balance transfers Or, a credit card for building credit may include cash back rewards. When choosing a credit card, it’s important to consider the type of card plus its other features and benefits.

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Cash back credit cards

Cash back credit cards are credit cards that offer a percentage of cash back on every purchase you make. There are three main ways cash back credit cards can structure their rewards rate.

• Flat-rate cash back credit cards earn the same cash back rate on everything
• Tiered cash back credit cards offer a bonus rate on some categories, like dining or groceries
• Rotating cash back credit cards give you a bonus rate (usually 5%) that switches categories every quarter

Cash back rewards are usually much simpler to redeem than travel credits, since most cards offer them in the form of statement credits on your card bill. Some examples of cash back cards include:

• Wells Fargo Active Cash^® Card (flat-rate)
• Capital One SavorOne Cash Rewards Credit Card (tiered)
• Discover it^® Cash Back (rotating categories)

Best cash back credit cards of 2024

Who are cash back credit cards best for?

Cash back credit cards are best for people who are looking for simple rewards or who don’t travel much.

Travel credit cards

Travel credit cards are cards that can have airlines and hotels as redemption options, helping travelers earn free flights and stays. They are both general and co-branded cards — general cards being those that are flexible and aren’t tied to a hotel or airline brand, while co-branded ones are.

You can either earn points or miles with travel cards. While the terms are often used interchangeably, points usually refer to hotel rewards or flexible rewards that can be redeemed at different hotel or airline brands, while miles refer to airline rewards.

Travel cards generally fall into one of three subtypes:

• General travel cards: Travel credit cards that earn rewards that can be used with multiple airline and hotel brands
• Airline travel cards: Co-branded credit cards that can earn rewards for a specific airline
• Hotel travel cards: Co-branded credit cards that can earn rewards for a specific hotel brand

Since these cards can have many different redemption options, including sometimes the ability to transfer points to other rewards programs, they can be more complicated to use. But once you learn how to use these cards’ benefits, you can save a ton on travel. Examples of travel credit cards include:

• Chase Sapphire Preferred^® Card (general travel card)
• United Quest℠ Card (airline card)
• Marriott Bonvoy Boundless^® Credit Card (hotel card)

Best travel credit cards of 2024

Who are travel credit cards best for?

Travel credit cards are best for people who travel often — or even occasionally. The type of travel credit card you get should depend on how much you travel. For example, if you’re a serious traveler, a card that offers benefits like airport lounge access, TSA PreCheck or Global Entry or hotel and airline credits is a good option. If you’re more of a casual traveler, there are cards with low or no annual fees but fewer benefits to suit your needs.

Rewards credit cards

Rewards credit cards are an umbrella term for travel or cash back cards, since they both earn rewards. You don’t have to own cash back or travel cards exclusively. Many people own both types of cards to maximize their rewards.

For example, if you have a points-earning card from Chase, like the Chase Sapphire Reserve^®, you can use a cash-back earning card, like the Chase Freedom Unlimited^®, to earn even more points.

Some more examples of rewards cards are:

• Capital One Venture X Rewards Credit Card (travel card)
• Citi Double Cash^® Card (cash back card)
• American Express^® Gold Card (travel card)

Best rewards credit cards of 2024

Who are rewards credit cards best for?

Rewards credit cards are best for people who have good credit, since many valuable rewards cards require a high score. If you need to improve your credit, a credit card for building credit can be a great choice — however, they may not offer rewards.

Business credit cards

Business credit cards are cards designed for business owners, and will typically have “business” in the name. A business credit card allows you to keep your business and personal expenses separate, offers useful account management tools and may even offer cards for your employees (often for free).

There’s a wide variety of both cash back and travel credit cards for businesses. If you or your employees travel often, then you may want to go get a business travel credit card. But if traveling isn’t part of your business, then you can likely find more value in cash back cards.

Some business cards are technically charge cards, which means you can’t carry a balance on them from month to month. Before you choose a charge card, make sure your business can afford to make your monthly payment in full. Some examples of business cards include:

• Capital One Spark Cash Plus (charge card)
• The Business Platinum Card^® from American Express (business travel card)
• Ink Business Cash^® Credit Card (business cash back card)

Best business credit cards of 2024

Who are business credit cards best for?

Business credit cards can be beneficial for any type of business owner, whether you’re a sole proprietor or large-scale business. There are business credit cards designed for both large and small businesses, so you don’t have to pay big annual fees or spend over $10,000 to earn a sign-up bonus.

Student credit cards

Student credit cards are meant for students actively enrolled in college. These can be an excellent first credit card, since they’re usually accessible to people with little or no credit. Plus many offer excellent cash back or travel rewards programs, which is rare for cards designed for building credit. When you graduate, some issuers will automatically upgrade your student card to a similar non-student card so you don’t have to apply for another one right away.

Some student credit card options are:

• Discover it^® Student Cash Back (cash back)
• Capital One SavorOne Student Cash Rewards Credit Card (cash back)
• Discover it^® Secured Credit Card (secured credit card)

Best student credit cards of 2024

Who are student credit cards best for?

Student credit cards are best for those in college trying to build credit. These should be your first option rather than secured credit cards. Secured credit cards are also a great choice for building credit in college — however, they usually require security deposits upfront of at least $200.

Balance transfer credit cards

Balance transfer credit cards — often referred to as 0% APR cards — allow you to transfer a balance from one card, usually with a high APR, to another one with a 0% APR for a limited time. Introductory APRs usually last between 12 to 24 months.​​ An applicant may want to transfer an existing balance, or they may want to pay off an expensive purchase, like furniture or technology.

Balance transfer cards usually have a balance transfer fee. They can range from 3% to 5% of the amount you want to transfer. There are credit cards with no balance transfer fee, but they often limit who can apply to them. Some balance transfer cards include:

• Citi Simplicity^® Card (balance transfer fee)
• First Tech Choice Rewards World Mastercard® (no balance transfer fee)
• Wells Fargo Reflect^® Card (balance transfer fee)

Best balance transfer credit cards of 2024

Who are balance transfer credit cards best for?

Balance transfer credit cards are best for people who are having trouble paying off debt from a high-interest credit card. Doing a balance transfer won’t get rid of your debt, but it can help you pay it down faster and keep it from snowballing into a much higher balance.

Credit cards for building credit

Credit cards to build credit are typically no-frills, simple cards to help you build a payment history. They can help you build your credit history by reporting your payments to all three credit bureaus: Equifax, Experian and TransUnion.

These cards typically come in two types:

• Secured credit cards or typically require you to put down a security deposit of at least $200. Your credit limit depends on your security deposit. It can be more, depending on how much you put down.
• Unsecured credit cards for building credit don’t require a security deposit, but may charge you annual or other fees.

Here are a few examples of both types of cards:

• Capital One Platinum Credit Card (no security deposit required)
• Discover it^® Secured Credit Card (minimum security deposit: $200)
• Capital One Quicksilver Secured Cash Rewards Credit Card (minimum security deposit: $200)

Best credit cards to build credit of 2024

Who are credit cards for building credit best for?

Credit cards for building credit are best for people who are either new to credit or trying to rebuild a shaky credit history. In order to use a credit card to build your credit score up, you’ll have to make each payment in full and on time.

How to choose the right type of credit card

Choosing the right credit card for you can seem overwhelming with so many options. Considering your financial situation, your credit goals and your spending habits can make the process less of a burden.

1. Decide how you plan to use the card

Is your goal for getting a credit card to get free travel? Or just save on your everyday spending? Think about what your goals are — whether it’s to earn rewards or build credit — then look into the best cards to reach that goal.

2. Decide on a business vs. personal card

Deciding whether you’d like a personal or business credit card can help you eliminate plenty of options fast. You don’t need to run a brick-and-mortar business to have a business credit card. Anybody could apply for one — even without an Employer Identification Number (EIN) — keep in mind that business credit cards can come with high annual fees and high spending thresholds to earn a sign-up bonus.

3. Find out your credit score

Check your credit score before applying for a card to get an idea of what kinds of cards you have a good chance of getting approved for. If it’s a high-end travel card, you likely won’t get approved with a poor credit score.

Your FICO® Score and VantageScore, the two main credit scoring systems that issuers consider, can be broken down into tiers:

If you’re below “Good” in either score, then you may need to consider a secured credit card to build credit.

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4. Look at where you spend the most

Reviewing what types of things you spend more on can help you find rewards that will maximize your earnings. For example, if you spend a lot on dining, groceries, gas, travel or entertainment, you can look for cards that offer elevated rewards for those categories.

If you don’t spend on any categories consistently, then a flat-rate 1.5% or 2% cash back card might be just as valuable to you.

5.Consider how much credit card debt you have

If you have credit card debt that’s impacting your credit score, then you may want to hold off on applying for a credit card — or at least have a plan to tackle it. That may include getting a balance transfer credit card. In any case, chip away at the debt you have to improve your score and boost your chances at getting approved for your next card.

6. Decide where you’re most likely to use rewards

If you’re an avid traveler, then narrowing down your search to travel credit cards can likely help you. You’ll want to look at the different tiers and annual fees of travel credit cards to find out which cards you can get the most value out of.

If you’re not much of a traveler and prefer the simplicity of earning rewards as statement credits, then it makes more sense to search through cash back credit cards instead.

7. Budget for an annual fee

Deciding beforehand how much you’re willing to spend on a credit card annual fee, or if you’d rather have a no-annual-fee credit card, can help you with your search process. In many cases, issuers will offer a group of cards at varying annual fees with key similarities — but more benefits for the higher-annual-fee cards.

If the cards you’re interested in do have an annual fee, make sure that the rewards and benefits will help you make up for it.