Whether you’re looking to build credit, earn rewards or pay down high-interest debt, there’s a credit card that likely fits your needs. There are so many types of credit cards and welcome bonuses that it could make anyone’s head swim!
We’ll go over each credit card type so you can identify which type of cards and rewards are best for you. We’ll even include the credit score you’ll need to aim for with each one.
Different Types of Credit Cards
Secured Credit Cards
A secured credit card is specifically designed for credit beginners and people who’ve had past issues with their credit. Typically you’ll only get denied for this one with serious delinquency or a recent bankruptcy on your credit report.
These types of credit cards require a security deposit of about $200-$300 which becomes your credit limit. The problem with these is that you have to be extremely disciplined to avoid going over the suggested utilization rate because the credit limit is so low.
The only way to raise the credit limit is to put down more money. This puts people who struggle with credit in a bad position. With a single purchase of $100, you’re already at 33% to 50% of your credit utilization (depending on your deposit) which actually lowers your credit score.
A better solution to a secured credit card is Credit Strong’s Revolv account. It’s a revolving credit account that helps you build credit without going into credit card debt. Payment suggestions are optimized to keep your utilization rate in check and you’re saving money.
Find out which Revolv plan would work for you and get started building your credit!
Unsecured Credit Cards
When referring to an unsecured credit card, it could mean one of two things. It might refer to standard credit cards with no purchase reward. These are your run-of-the-mill credit cards without the bells and whistles. It can also refer to many of the other cards on this list.
Unsecured credit cards are technically any type of credit card that doesn’t call for a security deposit. While you won’t need to put money down, most require a credit score of at least 670 and up to be approved.
Minus the secured credit card, the rest of the cards on this list are unsecured. Depending on the credit card issuer, there may be an annual fee. Some of them even carry rewards which we’ll dive into soon.
A few financial institutions offer unsecured credit cards for people with lower credit in the 580 to 669 range. However, you’ll likely pay for having lower credit with a higher interest rate or an annual fee.
Unsecured credit cards are best because your money isn’t tied up in a security deposit, so you can use it for other things. The credit limit for these cards can vary widely based on your credit score, income levels, and which card issuer you choose.
Business Credit Cards
Business credit cards are helpful for entrepreneurs looking to get rewarded for their company purchases or simply free up some cash flow. These are particularly helpful for keeping business and personal expenses separated.
Business credit cards also come in the form of charge cards which are linked to your business bank account. Some business credit cards also offer account opening bonuses along with cash back and travel rewards.
Depending on the card issuer you go with, you’ll need to meet a few qualifications.
- You’ll need a personal credit score of at least 680 in most cases
- Some cards require a personal guarantee
- There may be a time in business requirement of 1-2 years
- Your business will need to produce adequate income to qualify
Rewards Credit Cards
A rewards credit card is best for everyday purchases. They offer redeemable points that can be exchanged for:
- Merchandise
- Travel
- Gift cards
- A statement credit
- Or cash
One option is to get a card with a set rate of points earned on all eligible purchases. If you swipe your card more often in one category, some rewards cards offer a higher percentage of rewards on purchases in certain categories like dining, gas, or groceries.
A rewards credit card works best when you pay off the card regularly and avoid any interest charges that come with holding a balance. Mainly because it can quickly cancel out the value of any rewards you’re getting back.
The downside to using a card with rewards points is that the cash conversion isn’t easy to calculate in most cases. For example, the cash value of your rewards points might be less than if you decided to exchange the points for merchandise or a gift card.
A rewards credit card approval is typically granted for credit scores starting at 670 and up. The better your credit score is, the better chance you’ll have of getting approved for a rewards card.
Cash Back Credit Cards
Don’t want to hassle with converting rewards points to a monetary value? You won’t be restricted to what you can redeem rewards for either. Get cold hard cash delivered directly to your credit card balance or your bank account.
Cash-back credit cards come in two forms. A flat rate card and a card with bonus percentages based on specific spending categories. Sometimes you may find a combination of the two.
It’s easy to find a cash-back credit card with no annual fee. If you do come across one with a fee it’s usually not expensive. Most times it’s less than $100.
It’s important to check for minimum redemption amounts with cash back credit cards. This prevents you from cashing out until you reach a certain amount.
Another downside is that cash-back cards usually charge higher interest rates, but if you’re paying off your balance month to month you won’t have to worry about that often.
The average credit score to get approved for cash back credit cards ranges from 670 to 850, but there are also a few credit cards with cash rewards that approve people with fair credit (580 to 669).
Travel Credit Cards
If you enjoy collecting experiences around the world with great accommodations then a travel credit card might be the winner for you. Earn miles or points to redeem for flights, hotel stays, baggage fees, and more. In addition to the earned points or miles, you’ll find extra perks like:
- Access to exclusive airport lounges
- Concierge service
- Free TSA Precheck or Global entry
- Travel credits
- Priority boarding
- Status with partner hotels and airlines
Travel credit cards offer great rewards and regularly have introductory bonuses to persuade potential cardholders. Some of the travel cards offering the best rewards come with hefty annual fees. On the higher end, this looks like $395 to $695 annually.
Lower-cost annual fees start at about $95. If you shop around you’ll likely find a few cards that waive your first year’s fee or don’t have one at all. To start earning travel rewards you’ll need a credit score in the good to excellent range (700 to 850).
Student Credit Cards
Student credit cards are specifically for young adults who are just starting their credit journey and likely have limited or no credit history. These cards are easier to get approved for because their application standards aren’t as rigorous. There are a few stipulations to meet though.
- You’ll need to be enrolled at an accredited educational institution.
- You have to be at least 18
- If you’re under 21 you’ll need a cosigner or proof of independent income
- Applicants under 21 have to fill out a written paper application
Typically student credit cards don’t charge an annual fee and some even offer rewards on eligible net purchases. Since your credit history is little to none, you’ll also see higher interest rates compared to other unsecured credit cards.
If you’re a student looking to build credit, do your research on how to build credit responsibly before applying for a student credit card. And never spend more than what you can afford.
Co-branded Credit Cards
Co-branded credit cards combine the benefits of one brand with the credit card rewards of a traditional credit card company. Oftentimes, you’ll find this when Amex, CitiBank, Chase, or Discover have partnered with a hotel chain or airline to provide travel rewards.
It’s not just limited to airlines and hotels. This can also apply to retail stores such as Costco or Starbucks. It’s meant to reward brand loyalty and these types of cards work best with brands you’re already spending money with regularly.
In terms of travel rewards, co-branded credit cards offer their customers some of the best benefits and purchase rewards for using the card. It can include:
- Discounted hotel stays
- Reduced or free baggage fees
- A higher percentage of airline miles with each purchase
- Large sign-up bonuses at account opening
The average credit score for these cards is about the same as most travel credit cards which require good to excellent credit.
Store Credit Cards
When the cashier asks if you want to get 15% off of your purchase by applying for a store credit card, most times your answer should be a firm “No”. While you might get a percentage off your purchase that day, these cards have several downsides.
- Store credit cards limit you to one store or group of stores
- They offer some of the worst APRs
- The fee structures are notoriously costly
- Credit limits are usually low
Some store cards even charge deferred interest when you sign up for their 0% APR intro offer. So if your balance isn’t paid off by the end of the promotional period, you’ll pay retroactive interest on the remaining balance.
All store credit cards aren’t bad though. Some of the best credit cards in this category include–
- Target RedCard: 5% off at target, can be used outside of Target, and no annual fee.
- Costco Anywhere Visa Card by Citi: No annual fee with a Costco membership, cashback rewards, and APR as low as 18.24%.
- Amazon Prime Rewards Visa Signature Card: High cash back rewards, use outside of Amazon, and concierge service.
Credit Cards for Transferring Debt
If your existing credit card balances are overwhelming due to high-interest rates, you could find a credit card with a balance transfer offer. These credit cards typically have an introductory interest rate of 0% for about 15 to 21 months.
To transfer balances to your new 0 APR card, you’ll have to pay a balance transfer fee. These fees are 3%-5% of the total balance being transferred. If you have multiple credit cards that you’re transferring balances from, you’ll have to pay the balance transfer fee for each one.
Even though you’re paying a balance transfer fee you stand to save tons of money by having a few months of interest-free payments. These cards are available to people with good credit of about 690 and above.
0% Introductory APR Cards
If you’re looking to make a big purchase soon and want time to pay it off without interest, try a 0% introductory APR card. These credit cards can give you up to 18 months to pay off the balance without paying any interest.
Budget out how you’ll pay the card off within the promotional period if you’re serious about avoiding interest charges. You can also find cards that offer interest rates that are lower than average for a promotional period.
Virtual Cards
Virtual credit cards are a protective measure you can use to prevent identity theft and fraud when you shop online. It’s a unique temporary number connected to a credit card already in your name. It’s not a separate card.
When using a virtual credit card with an online merchant, you can simply close the virtual card if a data breach occurs without affecting your main credit card.
Some banks already provide access to virtual credit cards to protect their consumers from fraud. Capital One and Citibank are currently leading the charge.
There are two downsides to using a virtual card:
- Processing a refund through a virtual card takes more time than using a regular card.
- Some virtual cards have short expirations. So it could create a lapse in any subscriptions connected to it.
What type of credit card should I get?
The type of card you get depends on a few factors:
- Your credit history and credit score
- What you spend money on
- Any existing credit card debt
- What rewards you prefer
If you have an excellent credit score and love traveling, you may want to try a travel rewards card. If you’re fixing bad credit issues and need to bounce back, try a secured credit card or a Credit Strong Revolv account after correcting any credit card errors.
To find the best credit card for you, start by taking note of your lifestyle. Take stock of what you typically swipe your debit card for to see if you might benefit from a card with category bonuses. Consider what rewards you’d like to receive to improve your experience.
You should also analyze any existing credit card debt and determine whether it’s a priority to pay less interest on your balances. Pair all of these factors with information about your credit score and debt habits to find out which credit card is best for you.
CreditStrong helps improve your credit and can positively impact the factors that determine 90% of your FICO score.
