{"id":14534,"date":"2024-11-27T14:24:45","date_gmt":"2024-11-27T20:24:45","guid":{"rendered":"https:\/\/www.lexingtonlaw.com\/blog\/?p=14534"},"modified":"2025-06-04T15:55:59","modified_gmt":"2025-06-04T21:55:59","slug":"types-of-cards","status":"publish","type":"post","link":"https:\/\/www.lexingtonlaw.com\/blog\/credit-cards\/types-of-cards.html","title":{"rendered":"16 types of credit cards and their benefits"},"content":{"rendered":"\n
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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. <\/em>See Lexington Law\u2019s editorial disclosure for more information.<\/em><\/a><\/p>\n\n\n\n

The most common types of credit cards are rewards credit cards and cashback credit cards, but the best type of credit card is dependent on the person who opens it\u2014whether they want travel points, have business expenses or are trying to build credit for the first time.<\/p>\n\n\n\n

The most common credit card types are rewards credit cards and cashback credit cards, but the best credit card depends on you\u2014whether you want travel points, have business expenses or are trying to build credit for the first time.<\/p>\n\n\n\n

Whether you\u2019re a seasoned cardholder or a first-timer, you may be surprised at how many credit card types are available. Depending on your credit score and the length of your credit history, you may not be able to qualify for the ones with the most favorable terms and lowest interest rates. But chances are there\u2019s a card that fits your needs and may help you build credit if you use it responsibly. <\/p>\n\n\n\n

Keep reading to learn everything you need about 16 different types of credit cards, including each one\u2019s unique benefits. <\/p>\n\n\n\n

<\/a><\/a>1. Secured vs. unsecured credit cards<\/h2>\n\n\n\n

Most credit cards are unsecured. This means you\u2019re not required to put up a security deposit to start using the card.<\/p>\n\n\n\n

Conversely, secured cards<\/a> require an up-front payment as collateral if you can\u2019t pay your balance. Credit card issuers see borrowers with bad credit scores as riskier, so this deposit helps mitigate some of that risk<\/a>.<\/p>\n\n\n\n

<\/a>2. Starter credit cards<\/h2>\n\n\n\n

Those with little to no credit may find starter credit cards helpful for their credit journey. A starter credit card is usually easier to qualify for as it\u2019s meant to help people build up their credit score<\/a>.<\/p>\n\n\n\n

These cards typically don\u2019t offer great rewards or cash back incentives and come with high interest rates. However, if you can find one with no annual fees, it can be a great option to begin building credit.<\/p>\n\n\n\n

3. Student credit cards<\/h2>\n\n\n\n

Student credit cards operate like standard cards but often have low credit limits. The approval requirements are more lenient because they\u2019re marketed to students, who likely don\u2019t have much credit history. <\/p>\n\n\n\n

Student cards sometimes come with no annual fees, have reward or cashback options and can even offer incentives for good grades and GPA rewards.<\/p>\n\n\n\n

<\/a>4. Joint credit cards<\/h2>\n\n\n\n

Joint credit cards require two parties to apply together to receive credit, and they\u2019re both equally responsible for paying off the balance. Therefore, late or missed payments may ding both credit scores, while consistent, on-time payments will benefit both scores. Joint credit cards can help you or your partner get approved if one of you has poor credit. Additionally, they can help you or your loved one build credit.<\/p>\n\n\n\n

5. 0% APR credit cards<\/h2>\n\n\n\n

Sometimes, cards will offer temporarily lower APRs for an introductory period. These cards will give 0% APR<\/a> for a set period, meaning you don\u2019t pay interest on new purchases during that time. The promotional period typically lasts six to 12 months. <\/p>\n\n\n\n

If you know you have an upcoming big purchase you can\u2019t pay in full immediately, a 0% APR card will help you avoid paying interest.<\/p>\n\n\n\n

6. Credit cards with no annual fee<\/h2>\n\n\n\n

Many credit cards charge annual fees for the convenience of having the card and for the benefits and rewards they offer. Depending on how elite the card is, these fees can be anywhere from $50 to $5,000.<\/p>\n\n\n\n

However, many cards have no annual fee. These cards still have perks, but fewer perks than annual fee cards. Still, you can save an average of $95 per year if you choose a card with no annual fee. <\/p>\n\n\n\n

<\/a>7. Balance transfer credit cards<\/h2>\n\n\n\n

Similar to 0% purchase APR credit cards, balance transfer cards offer temporarily low introductory rates\u2014but specifically for balance transfers<\/a>.<\/p>\n\n\n\n

This is a great credit card option for those carrying significant debt on a high-interest credit card. Rather than closing the unfavorable card\u2014which may lower your credit score\u2014a balance transfer may be the better option.<\/p>\n\n\n\n

<\/a>8. Business credit cards<\/h2>\n\n\n\n

If you\u2019re a business owner, you\u2019ll likely want to apply for a credit card specifically for business use. This will separate personal and business expenses, and the rewards may help your business save money.<\/p>\n\n\n\n

You\u2019ll then begin to build business credit<\/a>. To apply, you\u2019ll need decent credit and either a federal tax ID or an employer identification number (EIN).<\/p>\n\n\n\n

Business cards often come with higher credit card limits and allow you to add card users so employees can also use the card.<\/p>\n\n\n\n

<\/a>9. Rewards credit cards<\/h2>\n\n\n\n

Most cardholders gravitate toward credit options that offer specific rewards so they can get the most out of their spending. <\/p>\n\n\n\n

Rewards credit cards are great for people who are experienced with credit cards and can pay off their monthly balances in full. It\u2019s best to be careful with rewards credit cards because the interest charges are typically high. If you\u2019re paying interest every month, it\u2019s like paying for the rewards rather than earning a free perk. <\/p>\n\n\n\n

<\/a>10. Cashback credit cards<\/h2>\n\n\n\n

These credit cards allow you to earn a cashback reward percentage\u2014typically ranging from 1% to 5%\u2014every time you make a purchase with the card. Some issuers will pay out the cashback balance annually, while others pay monthly.<\/p>\n\n\n\n

11. Retail credit cards<\/h2>\n\n\n\n

Specific businesses will offer retail credit cards, also known as store credit cards, that a customer may only use to make purchases at that store. While these cards aren\u2019t ideal for everyday purchasing needs, they\u2019re a great way to earn generous rewards at stores where you frequently shop.<\/p>\n\n\n\n

There are over 300 store credit cards available, from Walmart and Target to Lowe\u2019s and JCPenney.<\/p>\n\n\n\n

Retail credit cards typically have no annual fee and are easier to qualify for, but they also usually come with a higher-than-average APR.<\/p>\n\n\n\n

<\/a>12. Travel credit cards<\/h2>\n\n\n\n

Getting a free vacation for your everyday purchases sounds like a win-win. That\u2019s why travel credit cards are one of the most popular credit card types for people of all experience levels.<\/p>\n\n\n\n

These credit cards offer travel-related rewards, such as free hotel stays, airport perks and flyer miles. <\/p>\n\n\n\n

<\/a>13. Hotel credit cards<\/h2>\n\n\n\n

Hotel credit cards are affiliated with a specific hotel chain and offer rewards from accumulated points. These companies provide some points for purchases from unrelated businesses like grocery stores, gas stations and restaurants. But the main attraction is the bonus points you earn on eligible purchases made directly with the hotel, like nightly stays.<\/p>\n\n\n\n

These cards typically come with generous signup bonuses and some sort of perk, such as one free stay per year at the hotel chain. <\/p>\n\n\n\n

14. Airline credit cards<\/h2>\n\n\n\n

Certain credit cards offer rewards on purchases made with a specific airline, while others allow you to earn rewards with any airline or travel-related expense. These rewards rack up in the form of miles. For example, many cards provide two miles for every dollar spent on flights.<\/p>\n\n\n\n

Airline credit cards are a great way to score free and discounted flights. They also often come with airport perks such as TSA precheck, lounge access and flight upgrades.<\/p>\n\n\n\n

<\/a>15. Charge credit cards<\/h2>\n\n\n\n

Charge cards operate exactly like regular credit cards except for one major caveat: you must completely pay off the total balance each month. Failure to do so results in late fees and penalties and will likely cause a drop in your credit score<\/a>. On the flip side, they typically come with sizable initial bonuses and rewards.<\/p>\n\n\n\n

A charge credit card usually has a high credit limit and a generous points system. <\/p>\n\n\n\n

<\/a>16. Prepaid cards<\/h2>\n\n\n\n

Prepaid cards aren\u2019t technically credit cards because they don\u2019t involve borrowing money. Instead, a cardholder loads a set amount of money onto the card and purchases come from the card\u2019s balance, similar to a gift card. The spending limit then renews if and when the card is reloaded.<\/p>\n\n\n\n

People often use prepaid credit cards to stick to a budget and avoid credit card debt.<\/p>\n\n\n\n

<\/a>What type of credit card is best?<\/h2>\n\n\n\n

Ultimately, you should choose a card based on your personal preferences and financial goals. However, a few good rules of thumb apply when looking for the best credit card. Read the terms and conditions carefully before signing up for any card. Generally, cards with any of the following perks may be worth pursuing:<\/p>\n\n\n\n