Credit Card Types: Which Fits Your Needs? | The Motley Fool (2024)

With so many different credit cards available, it can be tough to figure out which to choose. You can narrow down your options by knowing what the credit card types are.

To help you pick the perfect credit card for your needs, we'll break down all the credit card types and what they have to offer.

Types of credit cards

There are a wide variety of credit card types. Most types are based on the cards' features. For example, cash back credit cards with no annual fee and credit cards that earn rewards are both types of rewards credit cards.

A credit card can be part of more than one category. For example, a card that earns rewards and doesn't charge an annual fee would belong to both those credit card types (rewards credit cards and no annual fee credit cards).

Below, you'll find a description of all the credit card types. When you look for a new credit card, it's often easiest to pick a type first, and then look at the best credit cards within that type.

Credit card comparison

We recommend comparing options to ensure the card you're selecting is the best fit for you. To make your search easier, here's a short list of standout credit cards.

OfferOur RatingWelcome OfferRewards ProgramAPRLearn More

Citi Double Cash® Card

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OnCiti'sSecure Website.

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20,000 ThankYou® PointsEarn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.Up to 2% cash back2% cash back: 1% when you buy plus 1% as you pay

Intro:N/A

Purchases: N/A

Balance Transfers: 0%, 18 months

Regular:19.24% - 29.24% (Variable)

Apply Now for Citi Double Cash® Card

OnCiti'sSecure Website.

Rates & Fees Credit Card Types: Which Fits Your Needs? | The Motley Fool (28)

Discover it® Cash Back

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OnDiscover'sSecure Website.

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5.00/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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Best for cash back on rotating categories
Discover will match all the cash back you've earned at the end of your first year.N/A1% - 5% CashbackEarn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases—automatically.

Intro:

Purchases: 0%, 15 months

Balance Transfers: 0%, 15 months

Regular:18.24% - 28.24% Variable APR

Apply Now for Discover it® Cash Back

OnDiscover'sSecure Website.

Rates & Fees Credit Card Types: Which Fits Your Needs? | The Motley Fool (56)

Chase Freedom Unlimited®

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OnChase'sSecure Website.

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5.00/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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Best for cash back
Up to $300 cash backEarn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) — worth up to $300 cash back. That's 6.5% on travel purchased through Chase Travel℠, 4.5% on dining and drugstores, and 3% on all other purchases.1.5% - 5% cash backEnjoy 5% cash back on travel purchased through Chase Travel℠, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases

Intro:0% Intro APR on Purchases and Balance Transfers for 15 months

Purchases: 0% Intro APR on Purchases, 15 months

Balance Transfers: 0% Intro APR on Balance Transfers, 15 months

Regular:20.49% - 29.24% Variable

Apply Now for Chase Freedom Unlimited®

OnChase'sSecure Website.

Standard credit cards

Standard credit cards are your basic credit card option without any special features. They don't earn rewards or have introductory offers. You can make purchases on credit and pay them off later, but that's it. If you're not sure how it works, our beginner's guide to credit cards can help.

Standard credit cards used to be one of the most common credit card types, but that's no longer the case. Most credit cards offer at least some benefits that qualify them for another category.

No annual fee credit cards

No annual fee credit cards are cards you can carry without paying anything. They could also be considered free credit cards. There are often other potential fees you could be charged, such as late fees, but these are avoidable.

As you'd expect, no annual fee cards typically don't have as many perks as cards with annual fees. That doesn't mean they're light on benefits, though. You can find no annual fee cards that earn rewards and include all kinds of valuable features.

This is one of those credit card types that appeals to a variety of consumers since many people don't want to pay anything extra for a credit card.

Rewards credit cards

Rewards credit cards earn rewards on purchases. The rewards you get depend on the rewards credit card you have.

Some rewards cards offer cash back. Others offer points or miles you can redeem. With credit card miles and points, the redemption options depend on your card's rewards program. The terms "points" and "miles" are just a stylistic choice. They don't determine how you can use the rewards. Some card issuers use the term "points," and others prefer "miles."

Every rewards credit card has a rewards rate, which is the amount of rewards it earns per purchase. Some rewards cards earn one flat rate on your purchases. For example, a flat-rate rewards card could earn 2% cash back or 2 points per $1 on purchases. There are also cards with higher rates in bonus categories, such as 3% back on groceries and 1% back on everything else.

Rewards credit cards are among the most popular credit card types, and there are several types of them. These include:

  • Cash back credit cards: Earn cash back.
  • Travel rewards credit cards: Earn points you can redeem for travel.
  • Gas credit cards: Earn a bonus on gas station purchases.
  • Grocery credit cards: Earn a bonus on grocery store purchases.
  • Gas and grocery credit cards: Earn bonuses on gas and grocery purchases.
  • Credit cards for dining and restaurants: Earn a bonus on dining spending.
  • Credit cards for streaming services: Earn rewards for streaming service spending.

Airline or frequent flyer cards

Airline credit cards earn rewards that you can redeem for air travel. These are also known as frequent flyer cards. Travel cards with no annual fee are also an option. Credit cards for international travel are popular too.

There are two types of airline cards: airline-specific credit cards and general airline credit cards.

Airline-specific credit cards are tied to one airline's frequent flyer program and often have special benefits with that airline. When you use an airline-specific credit card, you earn miles/points in that airline's frequent flyer program. This type of airline card works well if you usually fly with the same airline.

General airline credit cards aren't tied to a specific airline. They offer rewards you can use with multiple airlines. Certain cards let you transfer your rewards to multiple airlines' frequent flyer programs. Others let you use your rewards to cover travel purchases with any airline. And there are general airline cards that give you both those options.

Sign-up bonus credit cards

Sign-up bonus credit cards include an introductory bonus rewards offer. The sign-up bonus is available to new cardholders. There are usually conditions you must complete to receive the bonus.

In most cases, the conditions involve spending a certain amount of money with the card in a set timeframe. One card may offer a $200 sign-up bonus if you spend $500 in the first three months. Another may give you 50,000 points if you spend $4,000 in the first three months.

0% intro APR credit cards

0% intro APR credit cards offer new cardholders an interest rate of 0% for an introductory period. This special offer can apply to purchases you make, balances you transfer from other credit cards, or both.

Cards with a 0% intro APR on purchases are great if you need to pay for something expensive upfront and pay it off over time. Cards with a 0% intro APR on balance transfers, also known as balance transfer credit cards, are made for refinancing credit card debt. Balance transfer credit cards for bad credit are also available.

Note that after the introductory period ends, your card's APR will go up to its normal rate. It's best to pay off the balance in full before this happens so you won't be charged any credit card interest.

Based on credit history

There are also credit card types based on the credit history of the target cardholder. These include:

  • Credit cards for bad credit
  • Credit cards for fair or average credit score
  • Credit cards for good credit
  • Credit cards for excellent credit

Each of these credit card types covers who should apply. Credit cards for bad credit are aimed at consumers with low credit scores. The same applies to the other credit card types listed.

Secured credit cards

Secured credit cards require a security deposit to open. The security deposit is often equal to the cardholder's initial credit line and provides extra security for the card issuer. If the cardholder doesn't pay their bill, the card issuer can keep the deposit.

These are almost always credit cards for people with bad credit. If you have a better credit score, you can likely qualify for credit card types that don't require a deposit. But if you're building or rebuilding credit, a secured card can be helpful. It's much easier to get approved for a secured credit card since you're paying a deposit upfront.

Credit cards by issuer

Credit card types can be based on the card issuer. Some of the most popular credit card types by issuer are:

  • American Express credit cards
  • Bank of America credit cards
  • Capital One credit cards
  • Chase credit cards
  • Citi credit cards
  • Discover credit cards
  • Wells Fargo credit cards

Store credit cards

Store credit cards are issued by a specific retailer. In the past, this type of credit card has earned rewards you can redeem for gift cards with that retailer, which is how cards like the Best Buy Credit Card work. But in recent years, more store cards have offered cash back, and the Prime Visa is a notable example. There are also store cards, including the Target Circle™️ Card, that offer a discount on purchases made at the store.

Well-known store credit cards include the following:

  • Prime Visa
  • Capital One Walmart Rewards® Mastercard®
  • Costco Anywhere Visa® Card by Citi
  • Target Circle™️ Card
  • Best Buy Credit Card
  • Lowe's Advantage Card

Business credit cards

Business credit cards are designed for business owners, with features to reflect that. These cards may have more detailed expense tracking than a typical credit card or offer free employee credit cards with customizable spending limits. There are also business cards that earn bonus rewards in areas where business owners spend more, such as advertising or shipping.

Even though this type of card is for business owners, card issuers usually aren't too strict about who's eligible for a business credit card. You could qualify if you're a freelancer or if you just have a small side hustle selling products online.

Some consumers who don't have traditional businesses still like to open business credit cards for the benefits they offer.

Specialty credit cards

Some credit card types don't fit into any of the categories above. These specialty credit cards include:

  • Charge cards: A type of credit card that requires you to pay your bill in full every month, instead of being able to carry a balance.
  • Student credit cards: Credit cards designed for college students.
  • High limit credit cards: Credit cards with above-average spending limits.
  • Low interest credit cards: Credit cards with lower interest rates than average.
  • Medical credit cards: Credit cards designed for financing medical expenses. These cards generally have deferred interest offers that allow you to pay medical costs over time without interest -- as long as you pay in full by the end of the promotional period.
  • Contactless credit card: Many card issuers offer contactless versions of their cards.
  • Instant approval credit cards: Credit cards that let you know right away if you're approved.

All credit card types and best of lists

Choosing a credit card

Don't you wish you could take a peek inside a credit card expert's wallet sometimes? Just to see the cards they carry? Well, you can't look in anybody's wallet, but you can check out our experts' favorite credit cards. Get started here:

Best credit cards

FAQs

  • There are dozens of different credit card types. The most popular include:

    • No annual fee credit cards
    • Rewards credit cards
    • Cash back credit cards
    • Travel credit cards
    • 0% intro APR credit cards
  • The best type of credit card depends on what you need it for. For example, if you want to get rewards on your regular spending, cash back cards and travel rewards cards are both good choices. If you have credit card debt to pay off, balance transfer cards can save you money.

  • To decide between credit card types, figure out what you want from a credit card, such as earning rewards, financing a big purchase, or building credit. Then, pick the type of credit card that will help you reach those goals.

Credit Card Types: Which Fits Your Needs? | The Motley Fool (2024)
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