The credit card market has evolved so much in recent years that it’s hard to say how many types of credit cards are out there. The good news is that this is not so important for your financial life.
You just need to know the main types of cards and which is most advantageous for you. So that’s exactly what we’ll teach you in this article.
7 different types of credit cards
There are more types of credit cards than you need to know. However, it is always important to know a good number of these. After all, it can serve different purposes at different times.
In the list below, check the main credit cards that everyone should know about. So follow each topic and learn more about these!
1. Cashback cards
These cards are famous for giving their customers back a percentage of their monthly spending. There is usually a fixed percentage for all purchases.
For example, the Wells Fargo Active Cash® Card offers 2% cashback to its customers. That way, if you make purchases worth $3,000, after paying off the balance, you will receive a bonus of $60.
Some other cashback cards choose categories to expand benefits. For example, the Chase Freedom Unlimited® Card offers 1.5% cash back on everyday purchases.
However, if you use it to buy airline tickets, you will receive a 5% reward calculated on the amount spent in that category. How to redeem rewards will depend on each card.
You can generally get them as a deposit into your account, use them as a balance, or as a gift card.
2. Points or miles cards
Points or miles cards work as cashback cards. The difference is that, instead of a cash percentage, you accumulate points or miles every time you use the card to make purchases.
These points or miles are like coins and have a dollar value. Depending on your card’s features, you can pay off a balance or convert it to cash.
Miles cards are more specific for those looking for travel advantages. You can use these currencies to buy airline tickets and other travel services.
A good example is the Capital One Venture Rewards credit card. This card can earn you up to 5 miles per dollar spent. Those miles can finance your vacation travel in the future.
3. Travel credit cards
In fact, it’s very easy to confuse these cards with mileage cards. You don’t need strict criteria to define each type of card. Thus, it is okay to categorize the same credit cards into more than one type.
However, travel credit cards often come with other benefits than frequent flyer programs. Among these advantages, we can highlight discounts on hotel stays and car rentals.
Another feature that will help you get the most out of your travels is the 0% foreign transfer fee. In addition, luxury travel cards can offer access to lounges, for example.
The American Express Platinum Card® is a luxury card. You can access the Global Lounge Collection and the Priority Pass network.
4. Student credit cards
These are specific types of credit cards for those still in high school or college. Therefore, it accepts applicants with little or no credit history. However, most of it only accepts candidates with guarantors.
Some templates may offer rewards for good grades. Anyway, they are a good instrument for financial education. Discover it® Student Cash Back is a good example of this type of credit cards.
5. Secured credit cards
These are another type of card for those who do not have credit or intend to build it. They work like any other card. However, the issuer will require secured deposits from their customers.
These are escrow deposits that banks can use to pay off a balance you haven’t paid on time. Indeed, these are the easiest types of credit cards to obtain.
A good example of these types of credit cards is the Capital One Platinum Secured Credit Card.
6. Co-branded credit cards
Co-branded credit cards arise through partnerships between banks and other companies. They are created by companies that want to offer a loyalty program to their customers.
Typically, this strategy is used by hotels, airlines, and even car rental companies. By using these cards, customers accumulate points or obtain discounts on services offered by the issuing company.
A good example is the Southwest Rapid Rewards® Priority credit card. It is a partnership between Southwest Airlines and Chase bank to offer advantages and even free airline tickets to customers.
7. Store credit cards
These can even be purchased from retail stores. Usually, they are a simple way to pay for purchases in installments at a certain establishment. However, they cannot be used in other service provider stores or other brands.
Those are extremely simple to obtain. However, they offer APR and other higher rates than the market average.
Type of credit card available in the USA?
| Type of Credit Card | Description |
|---|---|
| Standard credit card | A credit card with a revolving credit limit and require monthly payments |
| Secured credit card | A credit card that requires a cash deposit as collateral, often used by individuals with limited or poor credit |
| Balance transfer credit card | A credit card that allows cardholders to transfer high-interest credit card balances to a card with a lower interest rate |
| Rewards credit card | A credit card that offers cash back, points, or miles in exchange for purchases |
| Travel credit card | A credit card that offers rewards and benefits specifically for travel-related expenses |
| Business credit card | A credit card designed for use by small business owners |
| Student credit card | A credit card specifically designed for students, often have lower credit limits and less stringent approval requirements |
| Charge card | A card that has no pre-set spending limit but require the balance to be paid in full each month |
| Prepaid card | A card that is not a credit card but works like a credit card, it can be loaded with money and used like a credit card |
How to choose the best credit card for you?
I’m sorry to frustrate you with this answer, but there are no better types of credit cards. What exists is the card you can count on to reach a previously established objective.
Therefore, you should consider your credit score and income conditions before choosing a card. For example, if your score isn’t good or excellent, you might not be eligible for the best rewards cards.
However, you can take advantage of some travel cards and even good cards with cashback.
Additionally, it is always important to evaluate the expenses generated by maintaining a card and compare these with earnings to determine if there is a real “profit”.
It is a good idea is to simulate your expenses for the last three months as if you were already using the intended card. Would the earnings generated exceed the annual fee, interest, and other charges?
If the answer is yes, this might be a good option. If your score is bad, we advise you to forget the rewards for now and focus on building credit.
For this, there are excellent cards with low APR and other advantages for this moment in your financial life. The choice of your card will also depend on your income and debts.
By knowing these characteristics, your search will be a much easier job. After all, you can easily abandon currently inaccessible options and focus your search on cards you can count on.
Finally, know that a credit card does not define who you are or how successful you can be. Use it rationally, and you will benefit from this product.
What are the best credit card for groceries and gas?
There are several credit cards that offer rewards or cash back for groceries and gas purchases in the United States. Some of the best options include:
- Blue Cash Preferred® Card from American Express: This card offers 6% cash back on U.S. supermarket purchases (up to $6,000 per year, then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back on U.S. gas station and transit purchases, and 1% cash back on other purchases.
- Costco Anywhere Visa® Card by Citi: This card offers 4% cash back on eligible gas worldwide, including gas at Costco, 3% cash back on restaurant and eligible travel purchases, 2% cash back on all other purchases from Costco and Costco.com, and 1% cash back on all other purchases.
- The Citi® Double Cash Card: This card offers 2% cash back on all purchases: 1% when you buy plus 1% as you pay.
- The Chase Freedom Flex℠: This card offers 5% cash back on rotating bonus categories on up to $1,500 in purchases each quarter you activate, 5% cash back on travel purchased through Chase Ultimate Rewards, 3% cash back on dining and drugstore purchases, and 1% cash back on all other purchases.
- The U.S. Bank Cash+™ Visa Signature® Card: This card offers 5% cash back on your first $2,000 in combined eligible net purchases each quarter on two categories you choose, 2% cash back on one everyday category, and 1% cash back on all other eligible net purchases.
It’s important to note that these cards may have annual fees and different terms and conditions, so be sure to read the fine print and compare options before applying for a credit card.
