What are the different types of credit cards?

A little over 70 years ago there was just one credit card — the Diners Club card. Today, the world of credit cards has grown so exponentially that there seems to be a credit card that caters to almost everybody — from NASCAR fans to Harley-Davidson bikers to Trekkies. 

There are so many different types of credit cards that it can be difficult to navigate which one will serve you best. However, once you narrow down exactly what type of credit card you can qualify for, plus how you plan to use it, selecting a credit card that fits your spending patterns and lifestyle can be more clear. 

We’ll cover several of the most popular types of credit cards on the market, how they work and what type of person will most likely benefit from each.

How many types of credit cards are there?

While there are many types of credit cards catering to almost every type of card-seeker, the most popular ones fall into seven buckets: cash-back, travel, student, balance transfer, business, retail and credit-building or secured cards.

If you’re just starting out on your credit journey, you’ll most likely have to start with either a secured card, a student card or a retail card, as those are the easiest to qualify for. You’ll be granted a low initial credit limit until you can prove that you can handle credit responsibly by paying your bills on time every month and not maxing out the card. 

Once your credit score moves into the “good” range (typically a FICO Score above 670), you’ll find that you can qualify for a wider range of credit cards that offer rewards programs and a variety of perks and benefits, along with larger credit limits from which to borrow and repay.

Depending on your creditworthiness, spending patterns and lifestyle choices, there’s most likely a credit card that meets your needs. Some credit cards charge an annual fee in exchange for exclusive benefits and many other cards do not. 

So, if you’re looking to earn some cash back on certain types of purchases or dream about accumulating miles or points to redeem for free travel, the choice is yours to make. 

As long as you behave responsibly by not missing payments or spending more than you can repay in a timely manner, your options can become limitless.

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Most popular types of credit cards 

Let’s review the most popular types of credit cards, how they work and who they are best suited for.

Cash-back rewards

As the name suggests, cash-back credit cards offer a percentage of your purchases back as cash rewards. The cash-back rewards rate can be a flat percentage on all your purchases or where spending in some categories may earn higher rewards than in others. The cash back you earn can typically be applied as a statement credit against your purchases, disbursed as a check or redeemed for gift cards or other merchandise. 

As an example, the Wells Fargo Active Cash® Card offers the ability to earn 2% cash rewards on purchases, while the Chase Freedom Flex® * The information for the Chase Freedom Flex® has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. earns 5% cash back on up to $1,500 in categories that rotate quarterly (requires activation), 5% cash back on travel purchased through Chase Travel℠, 3% cash back on dining and drugstores and 1% cash back on all other purchases.

Cash-back cards are best for consumers who want a steady discount on their purchases or who spend heavily in certain categories, such as groceries or gas, and are looking to offset the cost of those purchases through the card’s rewards program. 

Travel rewards

Travel rewards credit cards can either be co-branded with a company, like an airline or hotel chain, or offered via a bank or card network with an affiliated travel portal from which you need to make your reservations (either by paying with the card or redeeming rewards points or miles).

The rewards can be accumulated generally as miles or points that can then be redeemed for future purchases or as statement credits against travel purchases made with the card. Some travel cards that offer exclusive benefits, such as airport lounge access, elite status or generous travel insurance, typically charge an annual fee that can range anywhere from under $100 to $600 or more. 

Co-branded travel cards are tied with a specific brand where any miles or points you earn are then transferred to that brand’s loyalty program. For example, any points you earn by spending on the Southwest Rapid Rewards® Plus Credit Card * The information for the Southwest Rapid Rewards® Plus Credit Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. will be moved to your Southwest Rapid Rewards account. Travel cards that are not co-branded allow you to rack up points or miles tied to that card that can then be redeemed through the issuer’s travel portal.

Travel rewards cards are highly valued by frequent travelers. If you are loyal to a particular airline or hotel brand, you may get exclusive benefits reserved only for cardholders. Or, if you’d prefer a wider range of travel options, you’d do well with a non-branded travel rewards card where you can redeem your miles or points for a variety of travel arrangements.

Balance transfer cards

Balance transfer cards come with promotional introductory APR offers. They’re typically used to transfer existing credit card balances from other accounts to the new card to take advantage of the lower promotional APR. 

Once the higher-interest-rate balance is transferred to a balance transfer card, more of your payments will go toward the principal of the debt because less interest accrues due to the lower APR. 

If you’re having trouble paying off a balance on a high-APR credit card, then a balance transfer card may provide some relief and allow you to tackle that debt more effectively.

Just know that most balance transfer cards require that applicants have a good to excellent credit score to qualify. 

A balance transfer intro APR promotional offer can include waiving interest charges anywhere from six months to almost two years. However, the balance transfer cards with really long promotional periods typically charge a fee of either 3% or 5% of the amount transferred. Any balance remaining after the promotional period ends will be subject to the card’s ongoing APR.

Balance transfer cards are best suited for those who are committed to paying off their transferred balance within the card’s promotional period, and who are saddled with high interest charges on another card.

Business credit cards

Small business credit cards help business owners keep their business and personal expenses separate while also taking advantage of their card’s business tools and rewards programs.

A business can be a side gig, a startup or a full-fledged operation. They typically require good to excellent credit to qualify, but often come with generous credit lines to help during cash-flow crunches. Most business cards also allow you to give employees their own cards with customized spending limits.

The range of the types of business cards is wide. Many business cards offer cash-back or travel rewards for spending in certain business-related categories. You can also find business cards offering 0% APR promotional periods for purchases or balance transfers, perfect if you have a large expense coming up that you want to avoid interest on or existing debt you want to transfer.

Annual fees on business cards can vary from $0 to hundreds of dollars, depending on the array of benefits and perks associated with the card.

Retail/store credit cards

Store-specific credit cards can provide regular discounts when shopping either in-store or online, are generally easy to qualify for and can come with rewards programs.

For example, the Target RedCard™ Mastercard * The information for the Target RedCard™ Mastercard has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. offers 5% off qualifying purchases at Target stores and Target.com, 2% rewards on dining and gas purchases and 1% rewards on all other purchases outside of Target. Rewards are redeemable as a Target GiftCard. Or, if you’re a Walmart regular, you may benefit from applying for the Capital One Walmart Rewards® Card * The information for the Capital One Walmart Rewards® Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. , which earns 5% cash back on Walmart.com & in the Walmart app, 2% cash back on restaurants and travel, and at Walmart Stores, Walmart & Murphy USA fuel stations and 1% cash back everywhere else.

Retailer cards are either co-branded with a card network, such as Visa or Mastercard, which can be used anywhere — or closed-loop, which means the card can only be used in the store or family of stores associated with the retailer. These cards typically come with low credit limits initially, have higher-than-average APRs and no annual fees.

Student cards

Student cards are a smart option for young adults who want to start building their credit profile and scores while still in school. The credit score requirements for approval are typically low, as are the initial credit limits, but with proper use, a student can hopefully graduate with a solid credit score that can help them qualify for future loans like an apartment lease or a car loan. 

To qualify for a student credit card, applicants have to be at least 18 years old and be able to show some sort of income – be it from student loans, bank deposits from family members or a part-time job. You’ll also have to include on your application the educational institution you are attending. 

School is a good time to learn some financial management skills. Opening a student credit card and exhibiting responsible borrowing and repayment behaviors will pay off in spades if you can graduate with a respectable credit score.

Want to build credit but don’t know how to start? Read our beginner’s guide to building credit.

Secured credit cards

Secured credit cards are designed for anyone looking to build or rebuild their credit histories and scores. They are different from regular, unsecured credit cards in that the issuer requires the cardholder to submit a security deposit that serves as the cardholder’s line of credit. 

The deposit protects the card issuer from a “risky” borrower who may not repay what is charged to the card. However, these cards can truly be a lifeline for someone who is looking for a quick way to create and build a positive credit history and credit score from scratch — provided that the cardholder uses the card responsibly and makes payments on time.

Beware that secured cards typically have very high APRs, so make sure you are paying your card off in full every month to avoid these charges.

When comparing secured cards to apply for, the best ones have low or no annual fees as well as offer a path to a higher credit line or the ability to upgrade to an unsecured card from the same issuer after a specific period of time. 

Essentially, secured cardholders are borrowing and repaying from their own funds. However, when you graduate to an unsecured card, and close the secured card, your security deposit will be refunded, minus any outstanding fees.

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How to choose the best type of credit card to fit your spending

Some factors to consider when choosing the best type of credit card for you include:

• Your credit standing (whether you’re new to credit or already have a good to excellent score).
• What type of rewards you’re looking for.
• Where you spend the most.
• Whether you’re willing to pay an annual fee in exchange for exclusive benefits.

If new to credit, your best bet is a retail, student or secured card. If you already have established a solid credit history and score, you’re more likely to qualify for a high-end rewards card.

Aside from your creditworthiness, if you’re interested in a cash-back card, take a close look at your spending patterns. See if you can find a card that rewards you well for where you spend the most. 

If groceries are your highest-spend category, look for a card that offers a high rewards rate on grocery purchases. If gas is consuming a big part of your budget, you may want a credit card that gives you bonus cash back on gasoline purchases.

And if it’s travel you’re dreaming about, decide whether you want a general travel rewards card or one that is tied to a specific hotel or airline. Travel credit cards often come with generous welcome bonuses, which can give you a leg up on your miles or points cache. They also come with some generous benefits, such as free checked bags, lounge access, trip interruption/trip cancellation/lost luggage protection and more.

And know that you can carry two or three cards to take advantage of what each has to offer as long as you are comfortable juggling multiple card payments. For example, if you’re a regular Target shopper who also is a frequent Southwest Airlines flier, then you can use the Target RedCard™ Mastercard * The information for the Target RedCard™ Mastercard has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. for your Target splurges and a Southwest credit card for everything else to earn points for free travel.

You can’t optimize your rewards if your spending doesn’t align well with its rewards program. So do some research and maybe even a little math to determine whether the card will be a good match for your spending and financial goals.

Frequently asked questions (FAQs)

What type of credit card is best?

Deciding which credit card is best for you will depend on what types of cards you can qualify for and how a particular card aligns with your spending and financial goals. If you’re new to credit, your choices will be limited until your credit score climbs to a point where you can qualify for more high-end rewards cards. 

There is no one-size-fits-all card — and you may want to carry several types of cards in your wallet that align with how you’re spending. For example, you may want a cash-back card that offers a generous rate on grocery purchases as well as an airline card that waives a checked-bag fee.

How many credit cards should I have?

According to credit bureau Equifax, having two to three credit cards that are managed responsibly (low balances and a record of on-time payments), along with other types of credit such as student loans or a car loan, can contribute positively to your credit score. If you’re not comfortable juggling multiple cards, having at least one long-held credit card along with other types of credit should suffice.

What are the benefits of using a credit card?

The obvious benefit of cash-back or travel cards is the rewards you can earn. However, the benefits don’t stop there. Oftentimes, the credit cards themselves have extra perks and protections that you won’t get using cash or a debit card. For example, many cards offer purchase protection which will reimburse your purchase if the item gets damaged or stolen soon after purchase.

Credit cards can also help you build, improve or maintain your credit score. Making your payment on time and keeping your balance under 30% of your credit limit will show that you are a responsible borrower and help to build your credit.