01Standard or "Plain-Vanilla" Credit Cards
Standard credit cards are sometimes referred to as "plain-vanilla" credit cards because they offer no frills or rewards. They're also relatively easy to understand. You might choose this type of credit card if you want a card that isn't complicated and you're not interested in earning rewards.
The standard credit card allows you to have a revolving balance up to a certain credit limit. Credit is used up when you make a purchase and made available again once you've made a payment. A finance charge is applied to outstanding balances at the end of each month. Credit cards have a minimum payment that must be paid by a certain due date to avoid late-payment penalties.
While many credit cards come with the ability to transfer balances, a balance transfer credit card is one that offers a low introductory rate on balance transfers for a period of time. If you want to save money on a high-interest rate balance, a balance transfer is a good way to go.
Balance transfer offers vary in the promotional interest rate - some are as low as 0% - and length of the promotional period. The lower the promotional rate and longer the promotional period, the more attractive the card is - but you'll often need good credit to qualify.
Just as the name indicates, rewards cards are those that offer rewards on credit card purchases.
There are three basic types of rewards cards: cashback, points, and travel. Some people prefer the flexibility of cashback rewards, while others like points that can be redeemed for cash or other merchandise. Travel rewards cards remain a favorite among frequent travelers because of the ability to earn free flights, hotel stays, and other travel perks.
04Student Credit Cards
Student credit cards are those specifically designed for college students with the understanding that these young adults often have little or no credit history. A first-time credit card applicant would generally have an easier time getting approved for a student credit card than another type of credit card.
Student credit cards may come with additional perks like rewards or low-interest rate on balance transfers, but these aren't the most important features for students looking for their first credit card. Students generally have to be enrolled at an accredited four-year university to be approved for a student credit card.
Charge cards do not have a preset spending limit and balances must be paid in full at the end of each month. Charge cards typically do not have a finance charge or minimum payment since the balance is to be paid in full. Late payments are subject to a fee, charge restrictions, or card cancellation depending on your card agreement.
You typically need to have a good credit history to qualify for a charge card.
Secured credit cards are an option for people who don't have a credit history or who have damaged credit. Secured cards require a security deposit to be placed on the card. The credit limit on a secured credit card is typically equal to the deposit made on the card, but it could be more in some cases. You're still expected to make monthly payments on your secured credit card balance. Check out reviews of the best-secured credit cards.
07Subprime Credit Cards
Subprime credit cards are one of the worst credit card products. These credit cards are geared toward applicants who have a bad credit history and typically have high-interest rates and fees. While approval is often quick, even for those with bad credit, the terms are often confusing. The Federal government has made rules regarding the amount of fees subprime credit card issuers can charge, but the card issuers often look for loopholes and ways to skirt these rules.
Despite the unattractiveness of subprime credit cards, some consumers continue to apply for the cards because they cannot get credit elsewhere.
Prepaid cards require the cardholder to load money onto the card before the card can be used. Purchases are withdrawn from the card's balance. The spending limit does not renew until more money is loaded onto the card.
Prepaid cards do not have finance charges or minimum payments since the balance is withdrawn from the deposit. These cards are not actually credit cards, and they don't directly help you rebuild your credit score. Prepaid cards are similar to debit cards, but are not tied to a checking account.
09Limited Purpose Cards
10Business Credit Cards
Business credit cards are designed specifically for business use. They provide business owners with an easy method of keeping business and personal transactions separate. There are standard business credit and charge cards available.
Your personal credit history is used even for a business credit card - credit card issuer still needs to hold an individual accountable for the credit card balance.
10 Types of Credit Cards (and How to Use Them)
There are hundreds of credit cards spread across dozens of credit card issuers. The first step to choosing a credit card is first to figure out the type of credit card you want. The types of credit cards on the market range from basic or "plain vanilla" with no frills to premium cards with lots of perks and benefits.