What Types of Credit Cards Are Available?

There are many different types of credit cards available to consumers, and selecting the card that suits your lifestyle is an important decision.  Some cards carry rewards like cash back, frequent flyer miles, or discounts.  Other cards offer low to no interest, balance transfers, and much more.  You will learn about these different cards below.

Rewards credit cards give you something back for each purchase you make. Generally, these cards require good credit. They come in different types:

Cash back cards give you money back. You can usually get that money as a check or a deposit into a bank account, or you can use it to reduce your balance.

Airline credit cards and hotel credit cards give you miles or points that you can redeem for free flights or stays with the card’s partner airline or hotel chain. How you redeem your rewards on these cards might be subject to restrictions, such as dates when you can’t travel.

General travel cards give you points that you can use to pay for any travel expense. They’re more flexible than branded airline or hotel cards.

Store credit cards reward you for loyalty by giving you discounts or other benefits for shopping at the store that provided the card.

Rewards cards are ideal for cardholders who pay their bill in full every month. When you carry a balance, interest charges nip away at the value of rewards.

Low-interest cards don’t give you rewards; instead, they provide value with a lower interest rate, making it less expensive to carry a balance. Many times, these cards will come with a 0% introductory APR period, giving you time to pay off a large purchase without interest. You usually need good credit to qualify.

A balance transfer credit card lets you move your debt from another issuer to take advantage of a lower interest rate. Generally, these cards require good or excellent credit.

Credit card options for those with less-than-good credit are more limited. Rewards are more scarce, and interest rates are higher. Use these cards to improve your credit so you can qualify for better offers down the road:

A good card for average credit won’t charge an annual fee, or it might offer rewards with a fee.

For bad credit, your best option is usually a secured credit card. These cards require a security deposit that you get back after closing the account or upgrading to a regular, unsecured card. In the long run, a secured card is less expensive than unsecured credit cards for bad credit, which tend to charge high fees that, unlike a security deposit, you never get back.

Being a college student doesn’t automatically qualify someone for a student credit card. The Credit Card Act of 2009 prohibits issuers from giving cards to people under 21 unless they have proof of income or a co-signer, someone willing to put their credit on the line to help the applicant build theirs. When that’s not an option, a secured credit card is a way to establish credit.