11 types of credit cards

If you’re exploring credit cards, it’s helpful to understand what’s available in order to find the best option for you. For instance, there are cash back credit cards, credit cards designed to reward you for how you travel, secured credit cards, student credit cards and business credit cards. And each serves a different purpose.

This guide to credit card types can help you get started.

What you’ll learn:

• There are many types of credit cards, including cash back cards, travel cards, student cards, secured cards and cards designed for people building credit.

• Understanding the different types of credit cards can help you explore your options and decide which might be a good fit for you.

• Applying for new credit can temporarily affect your credit scores. But using a pre-approval tool could help you predict your eligibility before applying.

Credit cards fall into several categories, such as rewards credit cards, credit-building credit cards and low-interest credit cards. Other types of credit cards could include no-annual-fee cards and charge cards. 

Here are some different credit card options that can suit a variety of needs:

Cash back credit cards might reward everyday spending on things like groceries, gas, dining, entertainment or other bonus categories. For every qualifying purchase, cardholders earn back a percentage of what they spend.

Redemption options for cash back rewards might include statement credits, checks or gift cards. There are different types of cash back cards, such as:

• Flat-rate cards: These cards offer the same reward rate for all purchases. 

• Category-earn cards: These cards may offer higher rewards when you use them for specific things like groceries or dining out.

Travel rewards credit cards allow cardholders to earn rewards, like miles. You might come across two types of travel rewards credit cards:

• General travel rewards cards: These cards aren’t associated with any particular airline or hotel. This may give you more freedom to choose how to redeem your rewards. For example, you could earn rewards miles that you can use to book a flight.

• Co-branded travel rewards cards: These cards are branded jointly by the credit card issuer and the merchant—usually a specific airline or hotel. When it comes to purchases, these cards typically function like any other credit card. But rewards may be limited to the specific airline or hotel associated with the card.

Travel cards also may have other benefits to help travelers. For example, Capital One travel rewards cards offer perks including statement credits for TSA PreCheck® or Global Entry application fees, access to airport lounges, and annual travel credits.

Points credit cards might work similarly to other rewards cards. But instead of cash back or miles, rewards are offered as points. Similar to other kinds of rewards cards, you may be able to redeem points for things like:

• Cash back

• Travel

• Gift cards

• Credit toward your account balance

Store credit cards work a lot like other types of credit cards, though they’re affiliated with a specific store. And as the Consumer Financial Protection Bureau (CFPB) explains, “These cards typically provide additional discounts and frequent shopper rewards when used exclusively at their stores or with affiliate retailers.” 

Two types of store credit cards can be great financial tools when used responsibly:

• Private-label credit cards: These can usually be used only at the store and specified store affiliates. 

• Co-branded credit cards: Like traditional credit cards, these can typically be used anywhere—even outside the store and its affiliates. 

Whether you’re opening a small business or freelancing on the side, a business credit card can be useful if you’re an entrepreneur or a business owner. One reason is that it can help keep your business and personal expenses separate. 

Plus, there are often other perks that might come with a business credit card:

• Tracking and managing employee spending, as well as providing additional cards for employees to use

• Rewards, such as cash back

• Discounts with a select list of merchants

Secured credit cards are different from unsecured credit cards because they require a security deposit to open an account. The deposit acts as collateral. And it’s usually refundable. Other than that, a secured card functions the same as an unsecured card.

Because credit card issuers look at credit scores and credit reports during credit card qualification, applying for a secured credit card may be an option to help build your credit if you have less-than-excellent credit. Some secured cards even offer rewards.

Student credit cards work similarly to other types of cards. But they’re tailored to college students without an established credit history. That’s why they might be easier to qualify for and offer more relevant perks and benefits.

Some credit cards offer low or 0% introductory rates that apply to purchases. These can be useful if you’re planning to make a big one-off purchase and then pay it back quickly.

By law, intro rates must last at least six months, but they can sometimes last longer. During that time, you can focus on paying down your account balance. That’s because you may not have to pay much—or any—interest, depending on the promotional period and rate.

When the introductory APR expires, the standard APR kicks in. The standard APR will apply to both your current balance, if you carry one over, and future card balances. Depending on your card’s terms and conditions, it could kick in early if you are late with payments or exceed your credit limit.

When you transfer a credit card balance, you move an existing balance from one card to another—ideally at a lower interest rate. But you usually can’t transfer a balance to a card from the same credit card company. 

If you’re carrying a credit card balance, transferring it to a card with a lower rate could help you pay less interest—if you use the card responsibly and pay the balance during the promotional period. It could also help you consolidate debt or combine multiple balances into one, which could simplify payments.

But keep in mind that a balance transfer could come with fees. According to the CFPB, balance transfer fees are typically a fixed amount or a percentage of the amount you transferred—whichever is higher. And that fee could impact any potential savings.

There are lots of good credit cards offering rewards and perks that don’t come with an annual fee. 

If there’s no annual fee, that means you won’t be charged a fixed annual membership fee simply for having the card. But there may be other credit card fees or interest and finance charges, depending on how you use the card.

Charge cards function similarly to credit cards. But unlike a credit card, charge cards don’t usually come with a set spending limit. Instead, charge card accounts are often approved based on your financial history and your spending and payment habits. But they typically assess a fee to use the card.

Cardholders typically have to repay the balance on a charge card in full each month or when they get their statement. That means balances aren’t carried over to the next month. And missing payments could mean late fees or other penalties.

Now that you’re familiar with some of the most common types of credit cards, how do you choose the best credit card for your needs? Here are a few things to think about before submitting an application:

Your credit history could play a role in which cards you qualify for—and on what terms. Typically, applicants with higher credit scores qualify for better terms, such as higher spending limits, lower interest rates and better rewards. But if you’re working to improve your scores, you may want to focus your search on a credit-building card.

You can monitor your VantageScore® 3.0 credit score and access your TransUnion® credit report for free with CreditWise from Capital One. It’s free for everyone, and using CreditWise won’t affect your credit scores. You can also get free copies of your credit reports from AnnualCreditReport.com.

What do you want out of your new credit card? If credit card debt consolidation is your goal, you may consider a balance transfer card with a low or 0% intro APR.

If you’re interested in earning rewards on everyday purchases, then a card with a rewards program may be more appealing.

Or maybe you’re looking for a credit card you can use to build credit. If that’s the case, keep in mind that it takes time to build credit. And it’s important to use your card responsibly by doing things like paying at least the minimum amount due every month.

Some cards come with annual fees. Things like missed payments could result in fees or other penalties, but those are avoidable with responsible use. Before you apply, be sure you understand how credit cards work and any potential costs.

Once you’ve picked the type of credit card that works for your budget and goals, the next step is choosing a specific card.

Finding the right credit card—whether it’s a travel rewards credit card, cash back credit card or student credit card—can take patience and research. Take the time to review your credit, compare card costs and find a card that offers benefits that work for you. Getting familiar with the different types of cards and how they work can help you find the best credit card for you.

When you’re ready, you can compare cards from Capital One and get pre-approved today—with no harm to your credit.

Whether your idea of a good time is going out on the town, traveling the world or staying in, Capital One has a rewards card that may fit your lifestyle.

• See whether you’re pre-approved for rewards cards, with no harm to your credit. 

• Explore travel and miles rewards credit cards with unlimited miles you can actually use. 

• Earn unlimited 1.5% cash back on every purchase, every day, with a cash rewards credit card.

• Earn unlimited cash back on food and fun with a dining and entertainment credit card.