Types of credit card in USA – In a world where a dizzying array of credit card types are offered to consumers, it’s easy to get overwhelmed by the sheer number of options. The thing is, you don’t need to know everything about every credit card on the market. All you need to do is figure out which type of credit card is right for your needs, then focus your mental energy on researching which one is right for you.
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Different Types Of Credit Card in USA
How do you know which type of credit card is best for you? Consider the different types of credit cards described below and how each type of card can work for your spending and financial goals.
Rewards Credit Cards
Rewards credit cards usually give you points or cash back based on a percentage of your spending, and some even offer bonus points for popular categories like grocery, gas, and dining.
Rewards credit cards also usually offer at least a few different ways to redeem your points, often including options for statement credits, gift cards, or merchandise. This makes them a great credit card option for everyday expenses if you know you can pay off your card right away. By using a rewards credit card to cover your basic purchases such as groceries and household items, you can earn cash back and travel rewards for purchases you had to make anyway.
Here are some of our favorite rewards credit cards:
- Capital One VentureOne Rewards Credit Card: Best for travel rewards with no annual fees
- Chase Freedom Unlimited®: The Best for Your First Rewards Credit Card
- Citi Premier® Card: Best for Travel Rewards on Everyday Purchase
Cash Back Credit cards
Cash back credit cards make it easy for you to get cash back or a credit on your expenses, but how rewards are handed out varies from card to card. Some options in this niche offer a fixed percentage reward, while others offer bonus points in certain categories, such as dining or travel. Some even offer bonus rewards in categories that change every quarter, as well as a fixed reward percentage for all non-bonus purchases.
Many cash back credit cards also have no annual fee, although some with more generous bonus offers and reward schemes charge a modest annual fee, usually less than $100.
If you tend to spend more on certain categories, such as grocery or dining, you can choose a bonus category card instead of a flat rate card, which is great for those with mixed spending looking for a card for everyday use.
Here are some of our favorite cashback cards:
- Citi® Double Cash Card – Best for Flat Rate Cashback
- Discover it® Cash Back: Best for varying cashback categories
- American Express Blue Cash Preferred® Card: Best Cash Back for Groceries
- Capital One SavorOne Cash Rewards Credit Card: Best for Dining Cash Back
Travel Credit Cards
Travel credit cards allow you to earn rewards specifically designed for travel, whether that’s earning flexible travel credits that you can use on any travel purchase or even points that you can transfer to airline or hotel programs. Some travel credit cards also allow you to earn points within a specific program, such as a frequent flyer program or hotel loyalty program.
If you travel frequently for business or pleasure, you can also look for deluxe travel credit cards that offer benefits such as airport lounge access, annual travel credits, and Global Entry or TSA PreCheck credits. You don’t even have to get out of town to earn points and miles that can make your next trip more affordable – many of the best travel rewards cards allow you to earn these benefits by making daily non-travel purchases.
Here are some of our favorite travel credit cards:
- Capital One Venture Rewards Credit Card: Best for Flexible Travel Rewards
- Chase Sapphire Preferred® Card: the best travel card for beginners
- American Express® Gold Card: The Best Dinner Travel Rewards
- Discover it® Miles: the best Miles bonus for the first year
Balance Transfer Credit Cards
If you have high-interest credit card debt, consider using a balance transfer credit card to manage and pay off that debt. The best balance transfer cards allow you to earn an introductory 0 percent APR for a period of typically between 15 and 21 months, which can give you a nice break from paying interest charges while you focus on paying off your debt. Most cards require you to pay a 3 percent or 5 percent balance transfer fee up front, although there are some credit cards with no balance transfer fees. But even after you factor in the balance transfer fee, you can save a significant amount in interest during your card’s introductory APR offer.
Here are some of our favorite balance transfer credit cards:
- Bank of America® Personalized Cash Rewards Credit Card – The Best Balance Transfer Card with Flexible Reward Levels
- *Wells Fargo Cash Wise Visa® Card (this card is no longer available) – The best balance transfer card for digital wallet users
- Citi Rewards+® Card: The Best Balance Transfer Card with Rewards for Small Purchases
- The Bank of America® Custom Cash Rewards credit card was last updated on September 23, 2021.
Introducing Zero Percent APR and Low-Interest Credit Cards
You’ll also find a variety of credit cards that offer an introductory 0 percent APR for limited-time purchases, usually up to 18 months. Credit cards in this niche can be a big help if you have a large purchase and want to pay it off over time without interest. Likewise, you will also find low-interest credit cards that offer below-average rates across the board and not just during an introductory phase.
Here are some of our favorite introductory APR and low-interest credit cards:
- Citi® Diamond Preferred® Card: Best for Introductory APR on Balance Transfers and Purchases
- Citi® Double Cash Card – Best for Intro APR on Balance Transfers and Double Cash Back
- US Visa® Platinum Card Bank: Best for Long Intro APR Period
Business Credit Cards
Business credit cards allow cardholders to keep their personal and business expenses separate while earning rewards for all their business expenses. Interestingly, business credit cards can also be cash back credit cards, general reward credit cards, travel credit cards, or even secured credit cards. You must have a business or income-generating activity to qualify for a business credit card.
In general, the hallmarks of a good business credit card are whether it helps you capitalize on your day-to-day expenses and makes it easier to run your business. Ideally, you want to find a credit card with a generous rewards program, expense tracking capabilities, and features that help improve your bottom line. Some business credit cards give you a fixed percentage reward for all your purchases, while others reward common business expenses, such as travel or Internet services, at higher rates. When it comes to redeeming your rewards, business credit cards generally allow you to redeem your rewards for cash back or airline miles.
Here are some of our favorite business credit cards:
- American Express Blue Business® Plus credit card: best for everyday business expenses
- Ink Business Unlimited® Credit Card: Best for Unlimited Refunds
- American Express Blue Business Cash™ Card: The best business card for startups
Student Credit Cards
Student credit cards are “beginner credit cards” designed specifically for young people with limited credit histories. In other words, the application requirements are not that strict, making it easier to get approved. Most student credit cards don’t charge an annual fee, and many offer added benefits for good grades and rewards for every dollar you spend. Using responsibly, signing up for a student credit card can help teens build credit and build good financial habits.
Here are some of our favorite student credit cards:
- Deserve® EDU Mastercard for students: the best student card with no credit history
- Discover it® Student Cash Back: The best student card for money back
- Petal® 2 “Cash Back, No Fees” Visa® Credit Card: The Best Starter Card for Students
- Discover it® Student chrome: the best restaurant rewards student card
Secured Credit Cards
Most credit cards are unsecured, meaning you don’t need to deposit any collateral. In contrast, secured credit cards require you to make a cash deposit to secure a small line of credit, usually for a similar amount. For example, you can sign up for a secured credit card and make a $500 initial deposit to receive a $500 line of credit. The single deposit (and thus the credit limit) can be as low as $49.
While posting collateral may not seem ideal, secured credit cards are the easiest type of credit card to approve, so they’re often useful when you need to build credit from scratch or rebuild your credit after a financial breakdown.
Here are some of our favorite secured credit cards:
- Capital One Secured Mastercard®: the best-secured card for bad credit
- OpenSky® Secure Visa® Credit Card: The Most Secure Credit Card
- Discover it® Secured Credit Card: Best Rewards Secured Card
Store Credit Cards
Store credit cards are offered through retail stores to allow consumers to charge for purchases and pay over time. Store credit cards are generally only used within the specific store that offers them, although some store credit cards may be used within a specific family of stores.
Store-brand credit cards typically have higher interest rates than general-purpose cards and often charge deferred interest. Interest deferred means you will get a low or 0 percent introductory rate for some time, but if you don’t pay the full amount within that time, you will be charged retroactive interest. That said, if you can pay off your store credit card on time, you can take advantage of some great perks and rewards programs.
Co-branded credit cards
Co-branded credit cards are a store or branded credit cards offered through traditional card issuers such as Chase, Citi, or American Express. These can be airline credit cards that allow you to earn miles within a specific frequent flyer program or hotel credit cards that allow you to earn points within a hotel loyalty program. Some co-branded credit cards are also associated with retail stores, although you can usually use them for out-of-store purchases as well.
In general, the rewards co-branded credit card offerings are limited to one brand, but their rewards are strong and in many cases, the value of these rewards (such as free hotel nights) is more valuable than the refund. †
Here are some of our favorite co-branded credit cards:
- Costco Anywhere Visa® Card from Citi: Best for Bulk Purchases and Gas Cashback
- Amazon Prime Rewards Visa Signature Card: Best for Money Back at Amazon.com and Whole Foods
- Citi® / AAdvantage® Platinum Select® World Elite Mastercard® – The Ultimate Airline Travel Card
- Hilton Honors American Express Surpass® Card*: The Best for Hotel Rewards
Other Types Of Credit Card in USA
Some other types of cards are worth mentioning:
Virtual credit cards replace your regular card details when you want to make secure transactions. These “disposable” account numbers route transactions through your regular credit card account, but you can hide your real account number. Virtual cards are available through many providers, including Citi cards and Capital One’s Eno program. You can also sign up for third-party services like Privacy to create a virtual card number for your existing account.
A prepaid card is loaded with cash and can be used for purchases until the balance reaches $0. You can buy them with predetermined dollar amounts, such as $50 or $100, or you can get a card that allows you to top up and transfer money to the card. Anyway, with a prepaid card, you can pay just like with a credit card, only there is no credit associated with it.
Prepaid cards are a convenient alternative for people who do not have a credit card. They can feel less risky than a traditional credit card, or even a debit card: If your prepaid card is compromised or the card itself is lost, the dollars you’ve loaded onto the card are the only risk at risk. A thief cannot access personal information or access your line of credit. However, unlike a secured credit card, a prepaid card won’t help you build credit when you’re just starting. But it can be a good substitute for a credit card and is easily available for anyone with cash.
If your child needs a payment card for emergencies, you have several options. Prepaid cards can be a smart way to go, or you can make your child an authorized user of your credit card account. If your child is 18 or older, you can also help them apply for a credit card, which will help them build credit and provide an easy way to pay.
Greenlight is a kid’s debit card that comes with a variety of parental controls. With the Greenlight app, parents can instantly send money to their kids’ accounts, set up expense management, receive transaction alerts, activate and deactivate cards, and more. Greenlight isn’t a credit card, but it does give kids access to many of the same payment features as a credit card, along with some digital safeguards for parents.
How To Choose The Right Type Of Credit Card
Follow these steps when figuring out which types of credit card in USA is right for you.
Check your credit score
First, you want to check your credit score to see where you stand. Excellent credit paves the way for eligibility for any credit card you want, including the best travel and rewards credit cards. On the other hand, if your credit score is just “fair” or you have particularly bad credit, you have a limited number of cards you can qualify for and you may need to start with a secured credit card.
To boost your credit score, try to reduce your credit usage, pay your bills on time, and consider combining different types of credit.
Write Down Your Goals
Before you sign up for a new credit card, know what you hope to achieve with a new card. Should you raise your credit score or hope to get a lower interest rate? Maybe you travel all the time and want a credit card with exceptional travel benefits. There is no right or wrong goal to pursue with different credit cards, but knowing what to expect from your new card can help you determine the best options for you.
Evaluate Your Debt
Do you have a lot of high-interest credit cards or other loan debt? If so, consider using a balance transfer credit card that will help you consolidate your debts during an introductory APR period. Conversely, if you’re not in debt and plan to stay in debt, you can focus on other credit card perks, such as rewards or cash back.
Compare Rewards Programs
If your goal is to earn rewards, make sure you know which credit cards offer the rewards you want. That could be cashback, flexible travel rewards, or credit card points that you can transfer to airlines and hotels. Either way, you’ll want to choose a credit card that allows you to earn rewards in the categories you already spend the most on.
Look up costs and other maintenance costs
Finally, be sure to compare credit card fees and long-term maintenance costs. Not only should you consider the interest on your credit card, but you should also be careful with annual fees, late fees, application fees, over-the-limit fees, and any other fees you may have to pay.
Types Of Credit Card in USA Frequently Asked Questions (FAQ)
What is the best type of rewards credit card?
The best type of rewards credit card depends on how you spend your money and what types of benefits make sense to you. For example, if you rarely leave home, a credit card that awards airline miles or hotel points as a reward wouldn’t make sense to you, but would be a great option for someone who travels often. If you’re not sure what kind of rewards you want, you can always start with a cash back credit card.
What is the interest charged on the different types of credit cards?
The interest charged on your credit card depends on several factors, including the card, the card issuer, and your credit score. The average credit card interest rate in April 2022 was 20.55%.
Conclusion – What types of credit card in USA is the best for you?
Choosing a types of credit card in USA can seem like a big responsibility. But in reality, the sheer number of options available means you’re more likely to find a card that meets your individual needs.