Different Types of Credit Cards

Here’s a look at the different types of credit cards that you can choose from:

• Rewards Credit Cards
  Rewards credit cards may offer rewards such as points on eligible purchases that may be redeemed in several different ways.
• Cash Back Credit Cards
  Cash back credit cards can give you a percentage of eligible purchases back each month and may be given in the form of a statement credit.
• 0% Intro Annual Percentage Rate (APR) Credit Cards
  Credit cards with a low or 0% introductory APR could mean less interest for most purchases for a set period of time.
• Balance Transfer Credit Cards
  Balance transfer credit cards may have low introductory interest rates to make it more attractive to transfer balances from other credit cards.
• Charge Cards
  Charge cards may have no preset spending limit, but the balance on the card may need to be paid in full each month.
• Student Credit Cards
  Student credit cards are designed for college students. They may be a good option for students who are seeking their first card.
• Business Credit Cards
  Business credit cards can be used by business owners and certain employees and may offer business-focused rewards.
• Secured Credit Cards
  Secured credit cards require a cash security deposit that reduces risk for the credit card company.
• Store Credit Cards
  Store credit cards may only be used with specific retailers.
• Prepaid Credit Cards
  Prepaid cards may not be considered true credit cards. You must add funds to them before you can use them for purchases.

Below, you can find a breakdown of each of these credit cards, showing you their typical features and benefits, and how they work.

With rewards credit cards, you can earn points for eligible purchases that you make with your credit card. You can then redeem these points in a variety of ways. Depending on the card provider, your points may go further if you use them to make purchases with the card issuer’s partner companies.

Travel rewards credit cards are a type of rewards card that may allow you to earn points or miles on eligible purchases. These points or miles can add up quickly if the card offers generous rewards for certain category purchases. You can redeem points and miles in a variety of ways and may be able to use them towards flight purchases, hotel stays, and more.Travel credit cards can break down further into airline miles and hotel credit cards as well.

Cash back credit cards are another type of credit card. With a cash back card, you may receive a percentage of your spending back, which may be given in the form of a statement credit.

The interest rate on a standard credit card is called an annual percentage rate (APR). Most credit cards charge a variable APR. Some cards, however, offer introductory 0% APR for a certain period of time, that can be between 12 to 21 months.¹

While these cards can allow you to carry a balance for a set period of time without having to pay interest, it’s important to note that you may still need to make at least the minimum payment on time each month. You’ll also want to keep in mind that if you don’t pay the balance off at the end of the introductory period, you may need to pay interest on the balance that’s carried over. 

Some credit cards may let you transfer balances from other cards. Balance transfer cards can offer a low introductory interest rate specifically for that purpose. The interest rate can be as low as zero, but it may only operate for a short period of time (as little as six months), after which it may revert to a higher standard interest rate. You may also lose the introductory rate if you miss a minimum payment or pay late.

Charge cards work differently from standard credit cards. There can often be no pre-set spending limit, but , you may have to pay off the balance in full every month. There may be no interest charge if you pay on time, but late payments may incur fees. However, some charge cards may allow you to pay off part of the balance, with interest, over a longer period.

Interest rates on student cards can be similar to those on standard credit cards. For students on a budget, it may be worth looking for cards with lower APRs and no annual fee.

If you are running a small business, you might consider paying for some of your business expenses with a business credit card. Like personal cards, business cards can be a straightforward way to gain access to financing, but the balance may need to be paid in full every month otherwise interest will start accruing.

Some business credit and charge cards may have extensive rewards programs geared toward the needs of businesses and their owners.

To obtain a secured credit card, you may need to make a substantial security deposit, which may be equivalent to the credit limit on the card. You can then use the card like any standard credit card. These cards may not offer rewards, though some may offer cash back on certain types of purchases such as groceries and gas. Some cards can be upgraded to a standard card after a period of time, provided that you haven’t missed payments or paid late.