Over the past four years, I’ve owned about 45 credit cards. As a result, I’ve learned there isn’t one best credit card out there. Different types of credit cards do different things, and it’s not always clear from marketing and promotions whether a card is the best option for you.
To help you sift through all your options, we’ve put together a list of every major credit card type, some pros and cons, and a few top examples.
8 major types of credit cards available today
- Cash-back credit cards
- Travel credit cards
- Low-interest credit cards
- Secured credit cards
- Store credit cards
- Student credit cards
- Charge cards
- Small-business credit cards
Cash-back credit cards
These credit cards offer cash-back rewards to incentivize you to use your card regularly.
Although some cash-back credit cards offer sign-up bonuses, they’re typically smaller than the sign-up bonuses you get with travel credit cards.
Depending on the card, you might have different options for redeeming your cash back. Common redemption options include statement credits, direct deposits, paper checks, and gift cards.
Some cash-back credit cards also offer 0% APR promotions to make it easy to finance a big purchase or transfer a balance from a high-interest credit card.
Here are the most common types of rewards structures for cash-back credit cards.
Cards that offer flat-rate rewards give you the same rewards rate on every purchase.
Tiered rewards offer bonus cash back in certain spending categories. Popular bonus categories include groceries, gas, travel, and dining.
Some cards offer bonus rewards in certain categories but change up the categories every three months. For example, you might receive bonus rewards on transactions made at restaurants and gas stations one quarter. The following quarter, it could be department stores and Amazon.
Pros and cons
Since cash-back credit cards usually don’t charge an annual fee, you don’t have to worry about whether you’re earning enough rewards to break even. The flexibility of cash rewards also gives you more control over how you use your rewards.
Without an annual fee, however, cash-back credit cards typically don’t offer big sign-up bonuses. They also don’t come with a lot of extra credit card benefits beyond the basics such as price protection, purchase protection, and rental car insurance.
Should you get a cash-back credit card?
Cash-back credit cards are great for people who want flexible rewards. Unlike travel credit cards, which might limit you to travel-related redemptions, you can use your cash-back redemptions for anything.
Getting a cash-back credit card also might be a good choice if you’re looking to avoid an annual fee. Although some annual-fee credit cards offer cash back, they’re few and far between.
To get approved for a cash-back credit card, you typically need good to excellent credit. There are, however, some exceptions.
Top cash-back credit cards
If you’re interested in applying for a cash-back credit card, here are the top cards to consider:
- Citi Double Cash: Earn high flat-rate cash-back rewards.
- Blue Cash Preferred Card from American Express: Earn up to 6 percent on all supermarket purchases.
- Discover it: Get 5 percent back on everyday spending categories that change every quarter.
- Capital One QuicksilverOne: Get solid cash-back rewards with fair credit.
Travel credit cards
Whether you have an incurable case of wanderlust or you’d like to start crossing off some adventures on your bucket list, travel credit cards can help lower the cost of your trips.
Virtually all travel credit cards are targeted to people with good or excellent credit. While there are some exceptions, they usually aren’t worth your time.
Here are four different types of credit cards that offer travel rewards.
General travel cards
These cards offer rewards you can use for a variety of travel purchases. You’re not restricted to a particular airline or hotel, but you won’t get special perks such as free checked bags for flights or hotel elite status.
That said, some general travel cards have airline and hotel partners to which you can transfer your rewards for purchases.
If you’re loyal to a particular airline, getting its credit card can help you rack up miles faster. You’ll also usually get airline-specific perks, including free checked bags, priority boarding, and discounts on in-flight purchases.
These cards work best for folks who are loyal to a specific hotel chain. You’ll earn hotel points faster and get special benefits such as elite status, free upgrades, or free anniversary nights.
These cards often offer elite-level perks, including
- Free airport lounge access
- TSA Precheck or Global Entry for getting through airport security faster
- Reimbursements for travel expenses
- Special elite status with hotels and rental car companies
Note: Premium cards can be general, airline, or hotel cards and charge steep annual fees.
Pros and cons
Travel credit cards often come with big sign-up bonuses to help you pay for your next vacation. Depending on the card and how you spend your money, you could earn huge rewards with special bonus rewards categories.
Although you can find travel credit cards with no annual fee, they’re rare. The good news is many travel cards waive the fee for the first year, so you have some time to maximize the card’s value.
Also, some travel credit cards don’t offer a lot of value after the sign-up bonus, so you’ll have to look ahead to make sure a card is worth it.
Should you get a travel credit card?
Since I’m a travel nut, travel credit cards are my favorite. I’ve earned thousands of dollars’ worth of free travel over the years using travel credit cards. So, if you’re like me and love to travel and spend enough to make up for a big annual fee, a travel credit card might be a good choice.
The type of travel card you choose depends on your preferences and loyalty. General travel cards are best for people who want the cheapest travel option every time, while airline and hotel cards are good for folks who want to stick with one brand. Premium cards are best for people who want extra perks and comforts.
Top travel credit cards
If you’re excited about the prospect of free travel, here are some of the best travel credit cards to consider:
- Capital One Venture: Get a big sign-up bonus, flat-rate rewards, and a lot of flexibility.
- Starwood Preferred Guest from American Express: Earn valuable hotel rewards and have the flexibility to transfer them to airline partners.
- United MileagePlus Explorer Card: Get a big sign-up bonus, airline perks, and limited airport lounge access.
- Chase Sapphire Reserve: Get travel reimbursements, airport lounge access, TSA Precheck, and more.
Low-interest credit cards
While credit card rewards are exciting, you might have other priorities. When we talk about low-interest cards, three types of credit cards typically come to mind.
Zero percent APR cards
Although this technically includes balance transfer cards, it’s mainly marketed toward people who want a 0% APR promotion on new purchases.
For example, I applied for such a card when my wife and I moved into our first home. We used the card to furnish the home and cover other moving expenses and are paying it off interest-free over 21 months.
Balance transfer cards
If you have a high-interest credit card balance, some cards allow you to transfer your balance and pay it off with a 0% APR promotion. Among the best balance transfer cards, you can get up to 21 months with no interest. That said, most of these cards charge a balance transfer fee of 3 percent to 5 percent of the transfer amount.
Ongoing low-interest cards
Instead of offering a promotional 0% APR to start you off, these cards offer a below-average interest rate from the start. Typically, only credit unions and small regional banks offer these types of credit cards.
These credit cards almost always come with no annual fee. But some annual-fee credit cards offer a 0% APR promotion as an extra benefit. Also, low-interest credit cards typically require good to excellent credit.
Pros and cons
You can avoid racking up high-interest credit card debt on purchases and potentially get rid of toxic credit card debt.
On the flip side, some of the best low-interest credit cards don’t offer rewards or other perks. So, if you get a 0% APR promotion to finance a big purchase and it doesn’t offer rewards, the card doesn’t offer much value once the promotional period is over.
Should you get a low-interest credit card?
If your top priority is to pay off a purchase or debt or you plan to carry a balance in general, a low-interest card might be for you. The good news is some of these cards do offer rewards, so shop around to get the best one.
Top low-interest credit cards
Depending on your needs and preferences, here are some low-interest credit cards to consider:
- Chase Freedom Unlimited: Earn rewards along with your 0% APR promotion.
- Citi Double Cash: Get a long 0% APR promotion for balance transfers plus rewards on new purchases.
- Citi Simplicity: Get one of the longest 0% APR promotions on both purchases and balance transfers.
- BankAmericard Credit Card: Pay no balance transfer fee upfront.
- Lake Michigan Credit Union Prime Platinum: Pay rock-bottom ongoing interest rates.
Secured credit cards
If you’re new to credit or are trying to rebuild a bad credit score, your credit card options are limited.
Luckily, secured credit cards can help you get on the right track. Since folks with bad credit pose a higher risk to credit card companies, however, secured cards require a security deposit as collateral.
The deposit usually is equal to your desired credit limit. Then, in most cases, you’ll get your deposit back when you close the account. Other then that, secured credit cards function the same as normal credit cards.
Note: Unsecured credit cards for bad credit do exist. But most of these cards charge exorbitant fees and interest. In other words, they’re usually not worth it.
Pros and cons
Secured credit cards are a great way to build credit without going into debt — as long as you pay off your monthly bill on time and in full. Also, your credit line typically is limited to your opening deposit, so you likely won’t have much wiggle room if you overspend.
In contrast, most secured credit cards don’t offer many rewards or benefits. The main focus of these types of credit cards is to help you build credit. Also, many secured cards charge annual fees, but you can avoid them if you do your research.
Should you get a secured credit card?
Secured credit cards are great for folks who are just starting out with credit or looking to get back on track. Specifically, secured credit cards can be a great way to rebuild your credit after bankruptcy or another major negative credit event.
Top secured credit cards
If building credit is your top priority, these cards will help you do it best:
- Discover it Secured: Earn rewards, pay no annual fee, and get your deposit back early.
- Capital One Secured: Potentially pay a lower deposit upfront.
- First Progress Platinum Prestige Mastercard: Get a low interest rate.
Store credit cards
There are two main credit card types you’ll see with retailers.
Closed-loop store cards
You can use these cards only at the store. You don’t get a lot of flexibility, and you’re forced to have a second card to use elsewhere. Closed-loop store cards might or might not offer rewards on the purchases you make.
Open-loop store cards
You can use these store cards anywhere. Some even offer rewards on purchases you make outside the store.
To get you to sign up, stores often offer one-time discounts when you apply.
Pros and cons
Store credit cards are typically easy to get if your credit is bad. And depending on the store, you might get ongoing discounts and offers to make it worth your while.
That said, store credit cards often charge high interest rates. And those ongoing discounts and offers could lead to overspending. Lastly, you could get into trouble if you apply for multiple store cards in a short period.
Should you get a store credit card?
If you’re going to get a store credit card, it’s best to do it with a store where you regularly shop. In other words, don’t let the initial discount sway you. Look for long-term value.
Top store credit cards
For general spending, here are the best store credit cards to consider:
- Amazon Rewards Visa Signature: It’s the best open-loop store card for online shopping.
- Costco Anywhere Visa: It’s the best open-loop store card for everyday spending.
- Target REDcard: It’s the best closed-loop store card for ongoing discounts.
Student credit cards
If you’re in college or planning to attend college soon, you might be able to avoid having to apply for a secured credit card. Student credit cards are designed specifically to help college students build credit while getting some of the perks you won’t get with most secured cards.
Student credit cards typically don’t require a minimum credit score, but you need to have some form of income to get approved. If you don’t, you might be able to apply with a cosigner.
Pros and cons
Student credit cards are easy to get if you meet the income requirements. They typically offer rewards, no annual fee, and incentives for things such as developing good credit habits and getting good grades.
These cards usually don’t offer high credit limits, though. So, if you can get approved for a good cash-back or travel card, you’ll get more flexibility there. Plus, you’ll get better rewards with an “adult” credit card.
Should you get a student credit card?
You should get a student credit card if you’re a college student who wants to build credit. Keep in mind that you need a Social Security number to apply for most student credit cards.
Top student credit cards
If you’re in the market for a student credit card, here are your top options:
- Discover it for Students: Earn 5 percent on rotating everyday categories.
- Journey from Capital One: Get decent flat-rate cash back and a higher credit line with on-time payments.
- Deserve Edu: Get approved as an international student with no Social Security number.
Charge cards are credit cards that don’t have a credit limit. That doesn’t mean unlimited spending, though. Rather, the credit card issuer typically will allow you to spend up to the amount it determines is reasonable based on your financial profile and spending habits.
The caveat is that you must pay off your balance monthly rather than carrying it over from month to month.
Pros and cons
Charge cards offer a lot of flexibility for spending, but the fact that you’re forced to pay off your bill in full each month might make it hard if something goes wrong and you can’t afford it.
Also, charge cards typically come with higher annual fees, so you have to spend big to break even.
Should you get a charge card?
Big spenders who need the flexibility of having no credit limit would find charge cards most useful. Also, business owners with capital needs that vary and who don’t want to be tied down to a set credit limit can benefit.
Top charge cards
As of January 2018, American Express is the only credit card issuer that offers charge cards. Here are the best cards it has to offer:
- Premier Rewards Gold Card from American Express: Get your annual fee waived the first year and special travel perks.
- Platinum Card from American Express: Get elite-level benefits such as airport lounge access, airline fee credits, free Uber rides, and more.
- Business Gold Rewards Card: You choose which category gives you the most rewards.
Small-business credit cards
There’s no problem with using a personal credit card for your business. But many small-business credit cards offer benefits that are tailored toward business owners.
Based on your needs and preferences, you can find a variety of small-business cards. Whether you want cash-back rewards, travel rewards, no annual fee, a 0% APR promotion, or a secured card, there’s a small-business version.
Pros and cons
Business credit cards often adapt their rewards and benefits for small-business owners. For example, American Express OPEN business cards offer tools to help with expense management, discounts with business-related retailers, and special merchant financing.
Small-business cards also typically offer higher credit limits than personal cards. That said, they aren’t legally required to offer the same protections as personal credit cards. For example, you might end up paying higher fees and interest rates than you anticipated.
Also, small-business credit cards require that you personally guarantee payments for your purchases, even if you have limited liability in your business.
Should you get a small-business credit card?
Anyone with an established business can get approved for a small-business credit card. While the best types of credit cards are reserved for people with solid credit, there are some you can get with bad or fair credit.
Even if your business doesn’t have a lot of expenses, it’s wise to have a separate credit card for your business to keep those expenses separate from your personal finances. That makes it easier to keep track of your expenses for tax purposes.
Top small-business credit cards
If you’re looking for a credit card for your small business, consider these ones first:
- Capital One Spark Cash: Earn a great sign-up bonus and a high ongoing rewards rate.
- Ink Business Preferred: Get a massive sign-up bonus and great travel rewards and perks.
- Ink Business Cash: Get a 0% APR promotion on purchases and balance transfers.
- Capital One Spark Classic: Get cash back with fair credit.
How to sift through the different types of credit cards
With so many credit card types available, it can be hard to know which one is best for you. Unfortunately, there’s no magic formula that works for everyone. Much of it boils down to your credit score, how you spend your money, and your preferences.
As you learn about the different types of credit cards, you should get an idea of which one would suit your needs best. And if you end up with a credit card you’re not satisfied with, you can apply for another one — just make sure to do so responsibly.
The important thing is you use credit cards to improve your financial standing, not hurt it. Make your payments on time and in full, create a budget so you don’t overspend, and avoid applying for multiple credit cards in a short period. These habits will help you build your credit over time and ensure you’re getting value out of the plastic you use every day.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
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The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
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Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
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6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
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|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|