In a world where consumers are filled with a confusing variety of credit card options, there is still an easy way to select the most suitable one. You don’t have to know all there is to know about every credit card on the market. All you have to do is determine which types of credit card would be best for your needs and then focus your mental attention on investigating which of those are the best fit.
List of Contents
- 6 Various Types of Credit Cards
- How to Choose the Right Type of Credit Card
6 Various Types of Credit Cards
Examine the many credit card types listed below and how each type of card can work for your spending and financial goals.
Rewards Credit Cards
Typically, a rewards credit card will award you with points or cash back based on a percentage of your expenditure. Moreover, some cards will even award bonus points in popular areas such as dining out, grocery shopping, and gas station purchases. Notably, your points can typically be redeemed for various alternatives, including bill credits, gift cards, or even products, with most rewards credit cards offering at least a few distinct ways to do so.
Because of this, you can use one of these credit cards for everyday purchases with the confidence that you will be able to pay off the balance immediately. You can earn cash back and travel rewards for purchases that you need to make regardless of whether you used a rewards credit card or paid with cash. Some examples of essential purchases include groceries and housekeeping supplies.
The following credit cards below are examples of the top rewards credit cards.
- Blue Cash Preferred® Card from American Express
- Capital One VentureOne Rewards Credit Card
- Citi Premier® Card
Travel Credit Cards
Travel credit cards allow you to earn rewards tailored exclusively to travel such as flexible travel credits. They may be applied to any travel transaction or points that can be transferred to airline or hotel programs. Importantly, some travel credit cards also allow you to earn points inside a particular program such as a frequent flier program or a hotel loyalty program.
Besides, if you frequently travel for business or pleasure, look for luxury travel credit cards that include benefits such as airport lounge access, annual travel credits, and credits for Global Entry or TSA PreCheck. You don’t even have to leave town to begin earning points and miles that can help you save money on your next trip. Many of the best travel rewards cards allow you to earn these benefits by making daily non-travel-related purchases.
The following credit cards below are examples of the top travel credit cards.
- Discover it® Miles
- American Express® Gold Card
- Capital One Venture Rewards Credit Card
- Chase Sapphire Preferred® Card
Cash Back Credit Cards
Normally, you may easily get cash back or statement credits on your spending with cash back credit cards. However, the manner that rewards are distributed differs from card to card. This type of credit card, cash back credit card, makes it easy to earn rewards. Some of them provide a constant rate of rewards, while others provide bonus points in specific categories such as dining out or traveling. Moreover, some credit cards even give additional rewards in areas that are rotated every three months, in addition to a set percentage of rewards on purchases that do not qualify for the bonus categories.
Many credit cards that offer cash back do not charge an annual fee. However, certain credit cards that offer more substantial bonus offers and rewards programs do charge annual fees. These costs tend to be on the lower end and are typically less than $100.
If you have a varied spending pattern and are looking for an everyday card, a flat-rate card is an excellent option. However, if you have a tendency to spend more in some categories such as dining out or grocery, a bonus category credit card may be more beneficial to you.
The following credit cards below are examples of the top cash back credit cards.
- Discover it® Cash Back
- Citi® Double Cash Card
- Capital One SavorOne Cash Rewards Credit Card
Student Credit Cards
Student credit cards can be thought as a type of starter credit card as they are tailored primarily to young individuals who have little to no credit history. To put it another way, the standards for the application are not as severe. It means it is easier to get authorized. Importantly, the majority of student credit cards do not charge annual fees. Many of them offer bonus perks for good grades in addition to rewards for each dollar spent on the card. Young people can get a head start on developing sound financial practices and a solid credit history by opening a student credit card account.
The following credit cards below are examples of the top student credit cards.
- Discover it® Student Cash Back
- Discover it® Student chrome
- Deserve® EDU Mastercard for Students
- Petal® 2 “Cash Back, No Fees” Visa® Credit Card
Business Credit Cards
Credit cards for businesses offer their users the opportunity to earn rewards on all of their business spending. It also allows users to keep their personal and business expenses separate. Credit cards for businesses can come in a variety of forms, including cash back credit cards, general rewards credit cards, travel credit cards, and even secured credit cards. To be eligible for a business credit card, you will need to demonstrate that you own or are actively involved in a venture that generates revenue.
In general, you can tell that you have a great business credit card if it allows you to reap benefits from the normal expenditures you make and makes the operation of your company simpler. Importantly, your best bet is to look for a credit card that offers a significant rewards program, the ability to keep track of your expenses, and other features that can help you improve your bottom line.
However, some business credit cards may give you a set percentage back on all of your purchases as rewards, while other cards will give you a bigger percentage back on frequent company expenses like traveling for work or paying for internet connection. When it comes to the process of redeeming your rewards, business credit cards typically provide you the option to convert your points into either cash back or airline miles.
The following credit cards below are examples of the top business credit cards.
- American Express Blue Business Cash™ Card
- Ink Business Unlimited® Credit Card
- The Blue Business® Plus Credit Card from American Express
Co-Branded Credit Cards
Credit cards that are offered by a store or brand in conjunction with a typical card issuer such as Chase, Citi, or American Express, are referred to as co-branded credit cards. These can include hotel credit cards that allow you to earn points inside a hotel loyalty program or airline credit cards that allow you to earn miles within a specific frequent flier program. Other examples include credit cards that allow you to earn miles within a specific frequent flier program. Although you can normally use them for purchases made at other types of businesses as well, several co-branded credit cards also have partnerships with specific retail outlets.
The rewards that are made available through co-branded credit cards are typically restricted to a single brand. However, the rewards that are made available through these cards are substantial, and in many instances, the value of these rewards ends up being worth more than cash back.
The following credit cards below are examples of the top co-branded credit cards.
- Delta SkyMiles® Platinum American Express Card
- Southwest Rapid Rewards® Priority Credit Card
- Marriott Bonvoy Brilliant™ American Express® Card
- Hilton Honors American Express Card
How to Choose the Right Type of Credit Card
When deciding which kind of card best suits your needs, you should think about carrying out the steps outlined in this section.
Make a list of your goals.
Before applying for a new credit card, consider what you want to achieve with it. There is no right or incorrect goal to pursue with various credit cards, but knowing what you intend to achieve from your new card will help you narrow down your possibilities.
Examine your credit score.
You should also check your credit score to determine where you are. Excellent credit will allow you to qualify for any credit card, including the best travel and rewards credit cards. If your credit score is only fair, or you have extremely terrible credit, the number of cards you can qualify for will be limited, and you may need to start with a secured credit card. You should reduce your credit utilization, pay your bills on time, and mix different types of credit to improve your credit score.
Check your debt.
You should consider whether you have a lot of high-interest credit card debt or loan debt. You should look into a balance transfer credit card that allows you to combine your obligations during an introductory APR term. If you don’t have any debt and intend to keep it that way, you can focus on other credit card benefits such as incentives or cash back.
Compare rewards programs.
If you want to earn rewards, be sure you know which credit cards offer the rewards you want. Cash back, flexible travel rewards, or credit card points transferable to airlines and hotels are all possibilities. In any case, you should select a credit card that allows you to earn points in the categories where you already spend the most.
Examine the fees and other carrying costs.
Lastly, consider credit card fees as well as long-term carrying costs. You should evaluate not only the interest rate on your credit card, but also any annual fees, late fees, application costs, over-the-limit fees, and any other expenses you may have to pay.
In short, even though there are many different types of credit cards, as long as you use them appropriately, every credit card can help your credit score increase. As it rises, you may be eligible for cards that give more substantial purchase rewards and other incentives. Once you understand the many sorts of credit cards, you can determine which one best meets your needs.
Capital One Venture Rewards Credit Card is regarded as the most flexible travel rewards credit card. It gives unlimited 2x miles on all purchases, which could be redeemed for travel purchases or transferred to more than 10 travel loyalty programs. In addition, this card includes a 60,000-mile welcome bonus after spending $3,000 during the first three months after account opening.
The Chase Sapphire Preferred® Card is an excellent option for beginners who wish to earn travel rewards. It offers 2x points for each dollar spent on travel and dining, and 1x point for all other purchases. With the Chase Ultimate Rewards program, points can be redeemed for travel or transferred to travel partners. This card also includes an 80,000-point welcome bonus after spending $4,000 within the first three months of account opening.
The main difference between secured and unsecured credit cards is that secured credit cards request a collateral deposit, whereas unsecured credit cards do not. Secured credit cards are often used by individuals with weak or no credit, but unsecured credit cards are chosen by those with existing credit histories. Furthermore, secured credit cards may include higher interest rates and fees than unsecured credit cards.
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