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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.
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.
Credit Card Issuers and Networks
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?
Credit card networks, like Visa and Mastercard, are the companies that process your payment every time you swipe.
Credit card issuers, like Chase and Citi, are the banks that loan you money when you make a purchase. They determine your card’s rates and features, and provide the online platform where you pay your bill.
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.
Cards for Poor or Limited Credit
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).
If you’ve never taken out credit before, these first-time cards are what you’re looking for. Aimed at new credit users, they have less stringent application requirements and low credit limits.
Each month, your card issuer will report your behavior to the credit bureaus, helping you build good credit as time goes by.
Be automatically considered for a higher credit line in as little as 6 months
Fraud coverage if your card is lost or stolen
Use online banking to access your account, even from your smartphone, with our mobile app
Check out quickly and securely with a contactless card, without touching a terminal or handing your card to a cashier. Just hover your card over a contactless reader, wait for the confirmation, and you're all set
Pay by check, online or at a local branch, all with no fee - and pick the monthly due date that works best for you
Get access to your account 24 hours a day, 7 days a week
Help build your credit through responsible use of a card like this
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.
Even though they require a deposit, secured cards are still credit cards. Alternatively, debit cards, which are issued by your bank, and prepaid cards, which you can buy from the store, are not — and thus will not help you build credit.
Cards for Carrying a Balance
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).
0% Intro APR for 18 months on purchases from date of account opening and 0% Intro APR for 18 months on balance transfers from date of first transfer. After that the variable APR will be 13.74% - 23.74%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening.
There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater
Get free access to your FICO® Score online.
With Citi Entertainment®, get special access to purchase tickets to thousands of events, including concerts, sporting events, dining experiences and more.
Shop with confidence knowing that you have dependable protection benefits, including $0 Liability on Unauthorized Purchases and Citi®Identity Theft Solutions.
The standard variable APR for Citi Flex Plan is 13.74% - 23.74%, based on your creditworthiness. Citi Flex Plan offers are made available at Citi’s discretion.
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.
0% Intro APR on purchases and balance transfers for 20 billing cycles. After that, a variable APR currently 14.49% - 24.49%.
Great offer from U.S. Bank, a 2021 World's Most Ethical Company® - Ethisphere Institute, February 2021.
No Annual Fee*
Flexibility to choose a payment due date that fits your schedule.
Get up to $600 protection on your cell phone (subject to $25 deductible) against covered damage or theft when you pay your monthly cellular telephone bill with your U.S.Bank Visa® Platinum Credit Card. Certain terms, conditions, and exclusions apply.
Foreign Transaction Fee2% of each foreign purchase transaction or foreign ATM advance transaction in U.S. Dollars 3% of each foreign purchase transaction or foreign ATM advance transaction in a Foreign Currency
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.
Cash Back Cards
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).
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:
General travel cards, which earn points and miles that may be redeemed with a variety of partners
Co-branded cards, which are affiliated with one particular airline or hotel chain, and often come with perks like free bags or elite status
Our best offer ever! Earn 100,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,250 when you redeem through Chase Ultimate Rewards®.
Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 100,000 points are worth $1,250 toward travel.
With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories
Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.
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: 20% back for Amazon purchases in the first 6 months, up to $200 back; $150 back for spending $3,000 in the first 6 months (earned as a statement credit)
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.
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:
Credit required: Is the card for people with limited credit history? Poor credit? Excellent credit? There’s more to the application decision than just credit, but since each credit card application (slightly) dings your credit scores, you should only apply for cards you’re likely to qualify for. To make it easier, you can check to see if you have any prequalified credit card offers available.
Annual fee: Once you start exploring the world of credit cards, you’ll discover that many charge a yearly fee simply for having the card. Some make up for it with generous rewards and perks; others are less valuable. So make sure your chosen card is worth its annual fee.
APR: The “annual percentage rate” is the interest rate you’re charged on your credit card purchases. As noted above, however, you can avoid all interest charges on purchases by paying your statement balance in full each month.
For rates and fees of the Blue Cash Preferred® Card from American Express, please click here.
At a glance
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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