Types of Credit Cards | Different Types, Advantages and Disadvantages

Before you for a credit card, it is advisable to check and know the types of credit cards that are available and then select the one that is best suitable for the purpose in which you want to use it. Every credit card is designed for a purpose and there are features that make them suitable for that purpose.

Also, there are credit card that requires specific charge as you are making use of them. To know the one that will give extra charges than what is expected, try to know basic information about gift cards.

Your search for the kinds of credit cards available should be dependent on the type of transaction that you want to fulfill. See Target Gift Card.

Once you have discovered the types of gift cards that are available for that purpose, you can now look out for the ones that have better advantages compared to others for the same purpose.

In this article that you are reading, I am going to be explaining to you in detail the types of credit cards that are available for use, their advantages and disadvantages.

If you are interested in getting more detailed information about this topic, kindly continue reading to the end.

Types of Credit Card

The following are the types of credit cards that one can make use of depending on different purposes:

Rewards credit cards

Rewards credit cards reward spending with points, miles, or cash back. Rewards credit cards are best for people who pay their statement balances in full and on time, so they don’t have to pay credit card interest. Many rewards cards are only available to those with good or better credit. 

Cash-back credit cards

Some people prefer cash-back cards because they offer easy-to-understand value. Cash-back credit cards give you back a percentage of the money that you spend on the card. See How to Load a credit card.

Some cash-back cards offer a flat rate of cash back on all purchases, such as 2% back on every dollar spent on purchases. Or they may have bonus categories, such as 3% back on dining while paying 1% on other purchases. 

Some cards also offer bonus categories that rotate throughout the year. For example, they offer 5% cash back on up to $1,500 in combined purchases in rotating quarterly bonus categories.

Plus, it earns 5% cash back on travel purchased through Chase, 3% cash back on dining, 3% cash back on drugstore purchases, and 1.5% cash back on all other purchases.

New account holders of the Chase Freedom Unlimited® credit card can also earn a $200 bonus if they spend $500 on the card within the first three months of activation. While not all cash-back credit cards have welcome bonuses like this, it’s nice that some cards do.

Travel credit cards

Travel credit cards earn rewards that you can use to pay for travel, such as airline tickets and hotels. These cards may offer other travel-related benefits as well, such as travel insurance or priority service. 

Travel credit cards can differ considerably. Some earn rewards that are transferable to multiple airlines or hotel programs, while others offer points or miles that can be used only for one co-branded airline or Hotel Company.

A few travel credit cards even offer bonuses for purchases in other spending categories, such as gas or dining. Some travel credit cards also offer new account bonuses—and many, but not all, charge an annual fee.

It can be hard to compare the value of rewards earned from different travel credit cards since points can be worth different amounts for each airline or hotel. 

Premium rewards cards

Many of the most valuable rewards credit cards that you hear about in the news or online are premium travel rewards credit cards. Premium rewards cards often have large signup bonuses and special benefits.

They are most often used for travel, as many of these cards earn travel rewards and offer travel-related benefits. 

Metal credit cards and black credit cards are often associated with luxury and exclusivity due to their unique and sophisticated designs, which can make them desirable options for those seeking a premium credit card experience.

Premium rewards cards almost always have high annual fees, but they can offer great value if you properly utilize them.

Many premium rewards cards are also only available to those with good or excellent credit. Two of the most popular premium rewards credit cards.

Both charge at least $550 in annual fees but come with many cardholder benefits and opportunities to earn statement credits for specific purchases. 

Business credit cards

Business credit cards allow small business owners to separate their personal purchases from their company’s expenses while also earning benefits, rewards, or other special features that are specifically designed for business needs.

Just like personal credit cards, there are a variety of small business credit cards that offer different benefits. There are no-annual-fee business cards, cash-back business cards, and 0% APR business credit cards. 

For business owners whose employees travel, there are cards that offer airline miles, hotel points, or general travel rewards. For example, the offers the ability to transfer rewards to airline or hotel partners.

It also offers 3x points on up to $150,000 spent each year on shipping, travel, internet, cable, and phone services, and online advertising. 

Student credit cards

You have to be at least 18 years old to open your own credit card account. If you’re older than 18 but younger than 21, you may face stricter verification requirements for a credit card, a type marketed to students between roughly age 18 and 22. 

Student credit cards are designed specifically for the needs of students. Students usually have little to no credit history, little to no income, and particular spending habits.

Some student credit cards may even offer extra cashback in categories where students tend to spend more, such as restaurants and grocery stores. Others encourage good habits by offering bonuses for paying your bills on time or getting good grades.

0% APR introductory purchase cards

Credit cards with 0% APR allow you to take a break from interest charges on new purchases for a set period of time after opening the card. These cards can help you pay down an existing balance, save for the future, or get ahead on future payments. 

Legally, these interest-free promotional financing offers must be for at least six months. However, the most competitive cards offer 0% introductory APR financing for 15 months or longer. 

Besides the length of the promotional financing period, features such as balance transfer offers, standard interest rates, and other fees charged by the card are important to consider when comparing 0% APR cards.

Also, keep in mind that you’ll still have to make a minimum monthly payment and will incur interest on any remaining balance once the promotional rate expires. 

Secured credit cards

Secured credit cards require the cardholder to pay a refundable security deposit, which typically becomes the amount of the card’s credit limit.

Secured credit cards are easier to get approved for than most unsecured credit cards because you’re effectively pre-funding your credit line. This makes them an option for people with bad credit.

Secured cards are also often less expensive than the unsecured credit cards that are available to people with bad credit.

Another benefit of most secured cards is that the issuers report your balance and payment history to the three major consumer credit bureaus: Experian, Equifax, and TransUnion. So, if you’re using your card responsibly and paying your bills on time, it will help you to build your credit. 

Other than the security deposit and credit limit, secured credit cards work essentially the same way as any other credit card.

The physical card looks the same as other credit cards, so when you use your card to make a payment, no one will know that you’re using a secured credit card. And you must make your monthly payment, as the security deposit is only used in the event of a default. 

Once your credit improves, your card issuer may even allow you to move from a secured card to an unsecured card without closing your original line of credit. When that happens, you can close your secured card account and receive a refund of your deposit. 

Co-branded credit cards

Some companies partner with banks to offer co-branded credit cards. These credit cards provide benefits and rewards for the company (for example, a particular airline or hotel) but are issued by the bank. If you’re a regular customer of one airline or hotel, it may make sense to get their co-branded credit card.

Airline credit cards

Airline tickets can be one of the more expensive parts of travel, so some people like to have a co-branded airline credit card to earn miles or points that can be redeemed for award flights.

Some airline credit cards also offer benefits with the airline, such as free checked bags or priority boarding. Almost every major airline and some smaller airlines have credit cards. Examples include United, Southwest, Delta, and Frontier.

Hotel credit cards

After airline tickets, hotels are the next largest item on most people’s travel budgets. If you like to stay with one hotel brand over others, it may make sense to have a co-branded credit card for that hotel. 

Hotel credit cards offer points that can be redeemed for award stays. Some hotel credit cards also offer additional benefits—early check-ins, late check-outs, room upgrades, and the like.

Almost every major hotel company and some smaller hotel companies have credit cards. Examples include Hyatt, Hilton, Marriott, IHG, and Wyndham.

Store credit cards

Some retailers offer co-branded store credit cards. Frequent shoppers at particular retailers may want to maximize spending by opening a store credit card.

Store credit cards often earn bonus points on money spent at that store, and may give you discounts or special rewards.

Some store credit cards can only be used for purchases at the store, while other store cards are part of a larger payment network like Visa or Mastercard, and can be used anywhere.

I hope you have seen all the types of credit cards in this post. You can, therefore, apply for anyone that you like. In case of any other questions, kindly make use of the comment section below.

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