Credit cards come in multiple different forms with ranging interest rates, fees and reward programs. Here’s a guide to the different types on the market today.
When you look back at the history of credit cards, they started out simple and standard. Each issuer produced one card with one set of features. Today, credit cards come in multiple different forms with ranging interest rates, fees and reward programs.
Before you get overwhelmed by the lengthy list of credit cards available on the market today, take the time to determine which type of card will best suit your financial needs and lifestyle.
Types of credit cards
So, how do you decide which card would work best for you? Consider the different types outlined below and how they may help you reach your financial goals.
Balance transfer credit cards
Balance transfer credit cards allow consumers to transfer a high-interest balance onto a new card with a low interest rate. The best balance transfer credit cards offer an introductory 0 percent APR period that typically lasts between 15 and 21 months. The terms of a balance transfer credit card vary between offers, so be sure to read the terms and conditions thoroughly.
Most cards require cardholders to pay a balance transfer fee of 3 percent or 5 percent, although there are some with no balance transfer fee. Even with fees, a balance transfer card is a great tool with the potential to save you a lot of money if you can pay off your balance during the 0 percent APR introductory period.
Here are some of our favorite balance transfer credit cards:
- BankAmericard® credit card: Best balance transfer card with low interest
- Discover it® Balance Transfer credit card: Best balance transfer card for rotating bonus categories
- Wells Fargo Reflect℠ Card: Best balance transfer credit card for longest intro APR
Intro APR credit cards and low-interest credit cards
Low-interest credit cards can offer either a low introductory APR that jumps to a higher rate after a certain period, a single low fixed-rate APR or, for the most creditworthy applicants, a low minimum APR.
A low-interest card can be useful if you need to make a large purchase because it allows several months (sometimes up to a year) to pay it off, with little to no interest. Before using a low-interest card, read all the terms and conditions of the introductory rate so you won’t be surprised by fees or accumulated interest.
Here are some of our favorite intro APR and low-interest credit cards:
- Discover it® Cash Back: Best for low interest
- Citi® Double Cash Card: Best for intro APR on balance transfers and double cash back
- Blue Cash Everyday® Card from American Express: Best for families financing a big purchase
Cash back credit cards
Cash back credit cards allow you to earn cash rewards from your everyday purchases. If you’re looking to maximize your spending while also earning rewards, cash back cards essentially offer a rebate in the form of a specific dollar amount on eligible purchases. Most cash back cards offer a flat rate of rewards, while others offer bonus points in certain categories like dining or travel.
Since cash back programs are costly to credit card companies, some of these cards have annual fees as high as $95, though many have no annual fee. If used appropriately, a cash back card can earn the cardholder a significant amount of money over time.
Here are some of our favorite cash back credit cards:
- Blue Cash Preferred® Card from American Express: Best for cash back on groceries
- Bank of America® Customized Cash Rewards credit card: Best for flexible cash back categories
- Capital One SavorOne Cash Rewards Credit Card: Best for cash back on dining and entertainment
Rewards credit cards
Rewards credit cards allow users to earn incentives for making purchases with their credit cards. Points accumulate for each dollar charged on the card, and cardholders can redeem these points a number of ways. Rewards cards usually require better-than-average credit for approval and are similar to cash back cards in that cardholders can accumulate points they can redeem for awards.
General rewards cards offer cardholders a variety of items to cash in points for gift cards, electronics, hotel stays, plane tickets and more. Rewards programs and promotional offers often change, so carefully review a card’s terms and conditions before applying. Some general rewards credit cards come with an annual fee, however, many have no annual fee. Rewards cards are best for people who regularly pay off their balances each month.
Here are some of our favorite rewards credit cards:
- Citi Premier® Card: Best for rewards for travel and everyday spending
- American Express® Gold Card: Best for groceries and dining
- Chase Sapphire Preferred® Card: Best for sign-up bonus
Business credit cards
Business credit cards are available for business owners and executives and have many of the same features as traditional credit cards: low introductory rates, cash back programs and airline rewards. The difference is these cards come with many additional benefits designed for those running a business.
These perks may include: business expenses kept separate from personal expenses, special business rewards and savings, expense management reports, additional cards for employees and higher credit limits. Every card is a bit different, and promotional offers often change, so be sure to examine the terms and conditions for each card before applying.
Here are some of our favorite business credit cards:
- Bank of America® Business Advantage Unlimited Cash Rewards Mastercard® credit card: Best for flat-rate unlimited boosted rewards
- American Express Blue Business Cash™ Card: Best business credit card with no annual fee
- Capital One Spark Cash Plus: Best for flat-rate cash back
Student credit cards
Many college students need a credit card, but they generally have little or no credit history, which makes it difficult to get approved for a traditional card. Student credit cards are specifically designed for those enrolled in accredited four-year colleges and universities to help them build a credit history from the ground up.
Compared to consumer cards, student credit cards are often scaled back somewhat in terms of rewards, features and other benefits, but they can still be a valuable commodity. If used wisely, a student can take the first step toward building a solid credit history with this type of credit card.
Here are some of our favorite student credit cards:
- Discover it® Student Cash Back: Best for everyday spending
- Capital One SavorOne Student Cash Rewards Credit Card: Best for entertainment seekers
- Capital One Quicksilver Student Cash Rewards Credit Card: Best for flat-rate cash back
Secured credit cards
Secured credit cards require collateral for approval. In order to secure the credit card, a security deposit of a predetermined amount is needed, usually equal to or greater than the credit amount. These cards are for people trying to build or rebuild their credit history.
Cards that help rebuild credit often come with low credit limits (such as $250) and additional fees. Be sure to read over terms and conditions for these add-on services before applying. If you use the card responsibly and pay all your bills on time, you can ask for a credit line increase down the road. The extra fees and low credit lines will be worth it if a secured credit card helps you get your overall credit back on track.
Here are some of our favorite secured credit cards:
- Capital One Platinum Secured Credit Card: Best secured credit card for no annual fee
- Capital One Quicksilver Secured Cash Rewards Credit Card: Best for flat-rate rewards
- OpenSky® Secured Visa® Credit Card: Best secured credit card for no credit check
Travel credit cards
Travel credit cards help you earn points and miles to use for travel loyalty programs. Credit cards that offer travel rewards for your everyday purchases let you redeem those points and miles for statement credit towards flights, hotel stays and other travel rewards.
If you travel often for business or pleasure, there are many luxury travel credit cards on the market that offer perks like airport lounge access, annual travel credits and credits for Global Entry or TSA PreCheck. Most travel rewards credit cards offer new cardholders the chance to earn a welcome offer or sign-up bonus. The most compelling travel rewards cards have hefty annual fees, although some will waive the fee the first year.
Here are some of our favorite travel credit cards:
- Capital One Venture Rewards Credit Card: Best general-purpose travel credit card
- Capital One VentureOne Rewards Credit Card: Best first-time travel credit card
- The Platinum Card® from American Express: Best luxury travel card
Co-branded credit cards
Co-branded credit cards are designed to work like a traditional rewards credit card but with rewards specific to one brand, such as an airline, retail or hotel chain. Co-branded airline credit cards, for example, are primarily designed to reward cardholders for booking travel through that airline or its partner airlines.
With a co-branded hotel credit card, you can redeem your points for free nights and upgrades at the hotel chain. Because these reward programs can be costly for credit card companies, many come with an annual fee. If you are not a frequent traveler, the annual fee may negate the benefit of the rewards earned.
Here are some of our favorite co-branded credit cards:
- Southwest Rapid Rewards® Plus Credit Card: Best for Southwest Airlines
- Amazon Prime Rewards Visa Signature Card*: Best for Amazon purchases
- Marriott Bonvoy Boundless® Credit Card: Best for Marriott Bonvoy hotels
The best credit card for you depends on your spending needs and rewards preferences. While some globetrotters may get a lot of use out of the perks that come with travel credit cards, homebodies may prefer a more straightforward cash back credit card that rewards their everyday purchases. Take some time to research your different options to find the most useful card for your lifestyle and spending habits.
*Information about the Amazon Prime Rewards Visa Signature Card has been collected independently by CreditCards.com. The issuer did not provide the details, nor is it responsible for their accuracy.