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Interested in getting a credit card, but overwhelmed by all the options?
It’s not your imagination. According to my very non-scientific research, there are approximately one zillion different types of credit cards available.
And the best type of credit card for you will depend on several factors: your previous experience with credit, your reasons for getting a credit card, and where and how you plan to use your new plastic.
Here are nine basic types of credit cards, plus how to choose the right one for you.
|Starter||Capital One Platinum Credit Card (Review)|
|Student||Journey Student Rewards from Capital One (Review)|
|Secured||Discover it® Secured (Review)|
|Balance Transfer||Citi® Diamond Preferred® Card (Review)|
|0% APR||U.S. Bank Visa® Platinum Card (Review)|
|Cash Back||Citi® Double Cash Card – 18 month BT offer (Review)|
|Travel Rewards||Chase Sapphire Preferred® Card (Review)|
|Gas and Grocery||Blue Cash Preferred® Card from American Express (Review)|
|Retail||Discover it® Secured (Review)|
Before going further, it’s wise to check your credit reports and scores. That will help you quickly see which types of credit cards you’re eligible for. If you have poor or limited credit, for example, the best rewards cards will probably be out of reach until you build your credit with another type of card.
One of the first things you’ll encounter when getting a credit card is a jumble of words you’ve probably seen on store windows for years: Visa, Amex, Mastercard, Discover. And then there are banks, too: Chase, Capital One, Citi, etc. What’s the difference?
Networks, in other words, are the middlemen between you and the issuing bank. That’s why you’ll see hundreds of types of Visa cards, all with different features and logos. The same goes for Mastercards. Amex and Discover, on the other hand, are unique in that they act as both a network and an issuer.
Credit card types also vary depending on who you are: a small business owner? A student? Or just a regular Jane seeking convenience? The majority of people will apply for “personal credit cards,” which are for everyday consumers. Entrepreneurs, on the other hand, might be interested in business credit cards, and students in — surprise, surprise — student cards.
Now that you’ve got the issuer vs. network thing down, let’s move on to types of cards. First up: cards for people who are new to the world of credit (or have made a few mistakes in the past).
Each month, your card issuer will report your behavior to the credit bureaus, helping you build good credit as time goes by.
Read more about starter credit cards here.
Like the previous category, student cards are meant for individuals who haven’t yet had experience with credit. (Some even come with bonuses for getting good grades!)
Just be sure to pay your bills on time, as youthful credit mistakes can haunt you for years to come.
Read more about student credit cards here.
Unlike “unsecured” credit cards, which give you a mini loan each time you swipe, secured cards require you to pay a security deposit that usually serves as your credit line. Because of this additional precaution, they’re generally targeted at people with bad credit.
Since most secured cards will still report your behavior to the credit bureaus, they provide a smart pathway toward repairing your credit.
Read more about secured credit cards here.
We don’t recommend making a habit of carrying a balance on your credit cards. That’s because, if you pay your statement balance in full each month, you’ll typically never owe interest on purchases.
That said, if you plan to carry a credit card balance — whether you’re making a big purchase you’d like to pay off over several months, or whether you just need a little breathing room — these cards are a good choice.
If you couldn’t tell from the name, balance transfer cards are designed specifically for this purpose. They usually have a 0% interest rate for a limited period, which allows you to make payments toward your debt’s principal, rather than just the interest. Many, however, charge balance transfer fees — often 3% of whatever you transfer ($30 on a $1,000 balance, for example).
Read more about balance transfer credit cards here.
Though balance transfer cards often feature 0% introductory APRs, they are meant for moving a balance from one card to another. Straight 0% purchase APR cards are a better fit if you’re making a big purchase — say a new computer — that you’d like to pay off slowly without incurring interest.
As the 0% intro APR period often ends after 12–15 months, make sure you pay your balance in full before the higher interest rate goes into effect.
Read more about 0% APR credit cards here.
If you’ve got solid credit scores and are ready to get rewarded for the spending you’re already doing, then it’s time to get a rewards credit card.
Before applying, just make sure you’ll pay off what you spend each month. Since these cards have high APRs, interest payments would quickly negate any rewards you earn. If you need to float a balance on a credit card, jump to the previous section and apply for a 0% APR card instead.
With these cards, issuers return a certain percentage of every purchase you make — spend $1,000 on a 1% cash back card, for example, and you’ll get $10 back.
You could then redeem that $10 for statement credits, travel, gift cards, or merchandise. Some cards earn additional cash back when you spend money in certain categories, like groceries or dining; others earn flat-rate cash rewards on all purchases (find more details on how cash back credit cards work here).
Our pick: Citi® Double Cash Card – 18 month BT offer (Review), for its 2% flat cash back rewards on everything (1% when you shop, plus 1% when you pay your bill as long as you pay at least the minimum due on time) and $0 annual fee
Read more about cash back credit cards here.
Travel rewards cards allow you to earn points and miles that you can redeem for free flights, hotel stays, car rentals, and more. Many cards also come with travel and car rental insurance that can protect you on the road.
There are two main types of travel rewards cards:
Read more about travel rewards credit cards here.
These cards earn points or cash back at gas stations or grocery stores — and can either be general or co-branded. For people who aren’t big travelers, and who would rather earn rewards on everyday spending, gas and grocery cards are a good bet.
Our pick: Blue Cash Preferred® Card from American Express (Review), for earning 6% cash back at U.S. supermarkets (up to $6,000, then 1%), 3% at U.S. gas stations, and having a nice bonus: $300 statement credit for spending $3,000 in the first 6 months
Ever had a retail associate ask you to apply for a store’s credit card as you were checking out? Then you’ve been offered a retail credit card. These cards run on the major networks, are issued by banks, and are co-branded with a particular chain.
Though they often offer decent rewards for loyal shoppers, they sometimes have poor customer service and high APRs — so proceed with caution.
Read more about retail credit cards here.
As you can see, there are many types of cards — and the “right one” depends completely on your habits and needs.
No matter which type of card interests you, here’s what you should always check before applying:
Still stuck? Here’s a list of the best credit cards available.
For rates and fees of the Blue Cash Preferred® Card from American Express, please click here.
Credit cards come in many forms. There are cards designed for different functions (student cards, cash back cards, balance transfer cards) and different credit levels (from no credit to excellent credit). Features can vary even further depending on the issuer and/or network.
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