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Types of Credit Cards

9 min read
Last Updated: November 21, 2024
Getting a credit card

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Key Takeaways

  1. Some credit card rewards programs offer fixed rewards rates, while others have bonus perks in specified spending categories.

  2. Student and secured cards can help users with no or limited credit history build responsible habits.

  3. Credit cards with 0% introductory interest rates provide some relief from accruing interest.

There are many types of credit cards available, each with their own perks, requirements, and conditions. With so many credit cards, how do you pick which one is best for you?

It all depends on your personal financial situation and the ways you anticipate using your card—for travel, everyday spending, emergencies, or anything else. There’s likely a card out there for you, whether you have an established credit history or are just starting out.

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Different types of credit cards are best for different uses

When weighing credit card options, it helps to consider your goals. For example, you can decide whether you want to maximize rewards on eligible purchases, build credit history, or pay down credit card debt.

Credit cards with fixed rewards

Some types of rewards credit cards earn miles or cash back at the same rate on all eligible purchases, regardless of category. No matter how you spend with fixed rate credit cards, you’ll earn the same constant, specified amount of redeemable value in return. In some cases, fixed rate rewards cards offer lower rates than other rewards cards. But you can still earn extensive rewards by using these cards for most everyday purchases, from gas to lunch to clothes.

Credit cards with bonus rewards categories

If you mainly use your credit card for certain types of purchases, like travel, dining, or gas, you may want to opt for a rewards credit card with bonus rewards in these categories. Tiered rewards cards offer higher-value earning rates in specified categories, allowing you to make the most of your shopping habits.

The Discover it® Chrome Gas & Restaurant Card, for example, lets you earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically. You’ll still earn unlimited 1% cash back on all other purchases.1

There’s also the Discover it® Cash Back Credit Card, which allows you to earn 5% cash back on everyday purchases at different places you shop each quarter, up to the quarterly maximum when you activate.

Travel rewards credit cards

When you shop with a travel credit card, you earn rewards that you can redeem for flights, hotels, gas, rental cars, or other travel-related purchases. Some cards may also offer more flexible redemption options.

The Discover it® Miles Card, for example, lets you earn 1.5x Miles on every dollar of every purchase2 with no annual fee. And Discover matches the Miles you’ve earned on your credit card at the end of your first year.3 Plus, easily redeem Miles as a statement credit for travel purchases or get cash.2

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A travel credit card from certain card issuers may also offer additional perks that make trips easier, like room upgrades or access to an airport lounge.

Types of credit cards to build credit

If you have no or limited credit history, you may not be eligible for every type of credit card rewards program. However, there are several card options expressly designed for building credit.

Secured credit cards

If you’re starting from scratch or have little credit history, you may qualify for a secured credit card, which allows you to pay a deposit upfront up to the amount of your approved credit line to secure your credit limit. However, if you don’t pay off your secured card’s balance when you close the account, the credit card issuer typically keeps your deposit and applies it to the outstanding balance.

Did you know?

The Discover it® Secured Credit Card offers cash back rewards—earn 2% Cashback Bonus® at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, automatically.1 And get an unlimited dollar-for-dollar match of all the cash back you earn at the end of your first year.4

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Student credit cards

If you’re at least 18 years old and are enrolled in a two- or four-year college, you might qualify for a student credit card. A student credit card can help newer cardmembers build their credit history without having to put up a security deposit.

Both the Discover® Student Cash Back and Chrome for Students cards are cash back credit cards with no annual fee.

Types of credit cards to save on interest

Other types of credit cards let you save on interest. For these, look out for low intro Annual Percentage Rate (APR) on balance transfers and purchases.

Balance transfer credit cards

A balance transfer is when you switch debt from one credit card or loan to another credit card. Typically, a balance transfer credit card offers a 0% or low introductory APR for transfers from other credit cards or a personal loan. This perk can make it easier to pay down your balance from a high-interest credit card and reduce your overall credit card debt, as long as you repay your balance before the balance transfer credit card’s introductory period ends.

0% intro APR credit cards for purchases

In some cases, a balance transfer credit card may also offer 0% intro APR on purchases, meaning you’ll pay no interest on any purchase during the intro period. On the other hand, some credit cards only offer 0% intro APR on eligible purchases, but not balance transfers. It’s important to determine whether a low introductory APR credit card is a balance transfer credit card or not.

Just keep in mind that no introductory period lasts forever. Once it expires, you’ll have to pay a higher interest rate on any remaining balance.

More kinds of credit cards

The above types of credit cards are often the most common. However, you may also encounter some other types of credit cards on your credit journey.

 

You can often use other payment options like a debit card, gift card, or prepaid cards for the same types of transactions that you might use a credit card for. However, these payment tools don’t report activity to the major credit bureaus, nor do they allow you to borrow money, so they’re not forms of credit.

On the other hand, the following types of credit cards differ from traditional personal credit cards in some key ways. But unlike debit, gift, or prepaid cards, they still offer access to a line of credit, and usually build credit history. Depending on your specific financial situation, you might consider the following card options:

Business and corporate credit cards

Business credit cards work like personal credit cards, but they’re designed to handle professional expenses. While you can use a personal credit card for business transactions, keeping them separate is often better. Business credit cards may earn rewards like cash back and miles, like a standard card, plus perks like expense tracking and higher credit limits. They can help your organization build a business credit score, which makes it easier to qualify for business financing. To be eligible for a business credit card, you must own a business—that can include small businesses, sole proprietorships, and side hustles.

A corporate card is a type of business credit card designed for major corporations with substantial revenue. A side hustle likely won’t cut it for a corporate card—you usually have to demonstrate millions in income, have multiple employees, and a solid business plan.

Co-branded credit cards

Sometimes, companies like airlines, retail stores, or hotel chains may partner with a credit card issuer to offer co-branded credit cards. A co-branded card may offer special perks with the partner brand, like discounts, bonus hotel nights, flight upgrades, or even a higher rewards rate on purchases from the brand. You can use co-branded cards anywhere you can use a regular credit card; they’re not restricted to the partner brand.

Store credit cards

Some merchants, like department, clothing, or furniture stores, may offer store credit cards. You can usually only use a store credit card for transactions with the business that issued it. In some cases, your store credit card may be valid across multiple retailers within the same family.

 

Store credit cards may make breaking up big purchases easier. Many store cards offer exclusive rewards and perks. They can also help people begin building credit for the first time, as they’re typically easier to qualify for than some traditional cards (though they do often require a credit check). However, store cards often charge a particularly high interest rate, so credit card debt may mount quickly.  

Charge cards

Unlike typical credit cards, charge cards don’t allow you to carry a balance from month to month. Instead, charge card issuers expect you to pay your balance in full each month. Paying any less than the total amount you owe typically results in late fees and high interest charges until you pay in full.

Most charge cards don’t have a set credit limit, either. You can use your card as much as you want, as long as you can pay back the balance by the monthly due date.

What’s the best type of credit card to have?

There’s no single best type of credit card for everyone. The best credit card for you depends on your unique priorities and needs.  Before deciding on a card, you’ll want to compare fees, perks, and terms to determine which is best for your personal financial goals.

Just keep in mind that while you can have more than one card, applying for too many at once can affect your credit score.

Regardless of which card you choose, remember to use it responsibly and aim to pay your balance in full each month. No matter your starting point, responsible credit habits put you on the road toward a better financial future.

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  1. You earn a full 2% Cashback Bonus® on your first $1000 in combined purchases at Gas Stations (stand-alone), and Restaurants each calendar quarter. Calendar quarters begin January 1, April 1, July 1, and October 1. Purchases at Gas Stations and Restaurants over the quarterly cap, and all other purchases, earn 1% cash back. Gas Station purchases include those made at merchants classified as places that sell automotive gasoline that can be bought at the pump or inside the station, and some public electric vehicle charging stations. Gas Stations affiliated with supermarkets, supercenters, and wholesale clubs may not be eligible. Restaurant purchases include those made at merchants classified as full-service restaurants, cafes, cafeterias, fast-food locations, caterers, and restaurant delivery services. Restaurants located inside of or affiliated with another business, such as hotels or retail stores and establishments classified as a bakery, may not qualify. Purchases must be made with merchants in the U.S. To qualify for 2%, the purchase transaction date must be before or on the last day of the offer or promotion. For online purchases, the transaction date from the merchant may be the date when the item ships. Rewards are added to your account within two billing periods. Even if a purchase appears to fit in a 2% category, the merchant may not have a merchant category code (MCC) in that category. Merchants and payment processors are assigned an MCC based on their typical products and services. Discover Card does not assign MCCs to merchants. Certain third-party payment accounts and digital wallet transactions may not earn 2% if the technology does not provide sufficient transaction details or a qualifying MCC. Learn more at Discover.com/digitalwallets. See Cashback Bonus Program Terms and Conditions for more information.

  2. Redeem Miles: Starting at 1 Mile, you can redeem your Miles as a credit to your account to pay for all or part of your bill, for cash as an electronic deposit to your bank account, or for a credit for Travel Purchases made on your statement within the last 180 days. Each Mile is equal to $0.01. Miles cannot be redeemed directly with a specific airline carrier. Travel Purchases include airline tickets, hotel rooms, car rentals, travel agents, online travel sites, commuter transportation, restaurants and gas stations. Restaurant purchases include those made at merchants classified as full-service restaurants, cafes, cafeterias, fast-food locations, and restaurant delivery services. Gas Station purchases include those made at merchants classified as places that sell automotive gasoline that can be bought at the pump or inside the station. Gas Stations affiliated with supermarkets, supercenters, and wholesale clubs may not be eligible. Even if a travel purchase on your statement appears to fit in a Travel Purchase category, the merchant may not have a merchant category code (MCC) in a Travel Purchase category. Merchants and payment processors are assigned an MCC based on their typical products and services. Discover Card does not assign MCCs to merchants. Certain third-party payment accounts and digital wallet transactions may not be eligible for credit redemption if the technology does not provide sufficient transaction details or a qualifying MCC. See Terms and Conditions for more information.

  3. Discover Match®: We’ll match all the Miles you’ve earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer, and add it to your rewards account within two billing periods. You earn Miles only when they’re processed, which may be after the transaction date. We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This offer may not be available in the future and is exclusively for new cardmembers. No purchase minimums.

  4. Cashback Match: We’ll match all the cash back you’ve earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer, and add it to your rewards account within two billing periods. You earn cash back only when they’re processed, which may be after the transaction date. We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This offer may not be available in the future and is exclusively for new cardmembers. No purchase minimums.

  5. There is no hard inquiry to your credit report to check if you’re pre-approved. If you’re pre-approved, and you move forward with submitting an application for the credit card, it will result in a hard inquiry which may impact your credit score. Receiving a pre-approval offer does not guarantee approval. Applicants applying without a social security number are not eligible to receive pre-approval offers. Card applicants cannot be pre-approved for the NHL Discover Card.

  6. NO PURCHASE OR CREDIT CARD APPLICATION OR ACCOUNT NECESSARY. Sweepstakes open to residents of the 50 United States (DC) and the US Territories 18 years or older. Sweepstakes starts 9/3/2024 and ends 8/31/2025. See Official Rules for eligibility and entry requirements, entry deadlines and drawing dates, details including odds, list of eligible colleges and universities, prize descriptions and an alternate method of entry. Void where prohibited.

    Sponsor: Discover Products Inc. 2500 Lake Cook Road, Riverwoods, IL 60015

  • Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

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