When you look back at the history of credit cards, they started out simple and standard. Each issuer issued one card with one feature set. Today, credit cards come in a variety of forms with varying interest rates, fees, and rewards programs.
Before you get overwhelmed by the long list of credit cards available on the market today, take the time to determine which type of card best suits your financial needs and lifestyle.
Credit card types
So how do you decide which card will work best for you? Let’s take a look at the different types below and how they can help you reach your financial goals.
Credit cards with balance transfer
Balance transfer credit cards allow consumers to transfer a high interest rate balance to a new card with a low interest rate. The best balance transfer credit cards offer an initial 0 percent APR period that typically lasts from 15 to 21 months. Credit card balance transfer terms vary by offer, so be sure to read the terms and conditions carefully.
Most cards require cardholders to pay a balance transfer fee of 3 or 5 percent, although there are some that do not have a balance transfer fee. Even with a fee, the balance transfer card is a great tool that can save you a lot of money if you can pay off your balance within the 0 percent APR introductory period.
Here are some of our favorite balance transfer credit cards:
Introduction to APR Credit Cards and Low Interest Credit Cards
Low interest rate credit cards may offer either a low starting annual interest rate that rises to a higher rate after a certain period, a flat low interest rate with a fixed interest rate, or, for the most creditworthy applicants, a low minimum annual interest rate.
A low-interest card can be useful if you need to make a large purchase, as it allows you to pay it off in a few months (sometimes up to a year) with virtually no interest. Before using a card with a low interest rate, read all the terms of the introductory rate so that you are not surprised by commissions or accrued interest.
Here are some of our favorite introductory APRs and low interest credit cards:
Credit cards with cashback
Cashback credit cards allow you to receive cash rewards for daily purchases. If you want to maximize your spending while also earning rewards, cashback cards essentially offer a dollar amount discount on qualifying purchases. Most cashback cards offer a flat reward rate, while others offer bonus points in certain categories such as food or travel.
Because cash back programs are expensive for credit card companies, some of these cards have annual fees up to $95, although many do not have an annual fee. If used properly, a cashback card can earn a significant amount of money for the cardholder over time.
Here are some of our favorite cashback credit cards:
Credit card bonuses
Rewards Credit Cards allow users to earn rewards for making purchases with their credit cards. Points are earned for every dollar deducted from the card, and cardholders can use these points in several ways. Reward cards typically require above average credit to be approved and are similar to cash back cards in that cardholders can accumulate points which they can redeem for rewards.
Shared Reward Cards offer cardholders a variety of redeemable items for gift cards, electronics, hotel stays, plane tickets and more. Bonus programs and promotional offers change frequently, so please read the terms and conditions of the card carefully before applying. Some general fee credit cards come with an annual fee, however many do not have an annual fee. Reward cards are best for people who regularly pay off their balances every month.
Here are some of our favorite credit card rewards:
Business Credit Cards
Business credit cards are available to business owners and executives and have many of the same features as traditional credit cards: low starting rates, cash back programs and airline rewards. The difference is that these cards have many additional benefits designed for those who are in business.
These benefits may include: business expenses separated from personal expenses, special business benefits and savings, expense management reports, additional employee cards, and higher credit limits. Each card is slightly different and promotional offers change frequently, so be sure to read the terms and conditions of each card before applying.
Here are some of our favorite business credit cards:
Student credit cards
Many college students need a credit card, but typically have little or no credit history, making it difficult to get approved for a traditional card. Student credit cards are specifically designed for those who attend accredited four-year colleges and universities to help them build a credit history from the ground up.
Compared to consumer cards, student credit cards are often somewhat inferior in terms of rewards, features, and other benefits, but they can still be a valuable commodity. When used wisely, a student can take the first step towards building a solid credit history with this type of credit card.
Here are some of our favorite student credit cards:
Protected Credit Cards
Secured credit cards require a deposit for approval. Credit card security requires a predetermined amount of collateral, usually equal to or greater than the loan amount. These cards are for people trying to build or rebuild their credit history.
Cards that help rebuild credit often have low credit limits (like $250) and additional fees. Be sure to read the terms and conditions of these additional services before applying. If you use your card responsibly and pay all your bills on time, you can request an increase in your credit line in the future. The extra fees and low lines of credit will be worth it if a secured credit card helps you get your overall credit back on track.
Here are some of our favorite secured credit cards:
Travel credit cards
Travel credit cards help you earn points and miles for use in travel loyalty programs. Credit cards that offer travel rewards for your everyday purchases allow you to use those points and miles towards credit for flights, hotel stays and other travel rewards.
Whether you travel frequently for business or pleasure, there are many luxury travel credit cards on the market that offer perks such as airport lounge access, annual travel credits, and credits for Global Entry or TSA PreCheck. Most Travel Rewards credit cards offer new cardholders the opportunity to receive a welcome offer or signup bonus. The most attractive travel reward cards have hefty annual fees, although some waive the first year fee.
Here are some of our favorite travel credit cards:
Co-branded credit cards
Co-branded credit cards are designed to work like traditional rewards credit cards, but with rewards that are specific to a single brand, such as an airline, retail chain, or hotel chain. Co-branded airline credit cards, for example, are primarily intended to reward cardholders for booking flights through that airline or its partner airlines.
Using a co-branded hotel credit card, you can redeem your points for free nights and upgrades at the hotel chain. Because these rewards programs can be expensive for credit card companies, many of them have an annual fee. If you don’t travel often, the annual fee may negate the benefits of earned rewards.
Here are some of our favorite joint credit cards:
bottom line
The best credit card for you depends on your spending needs and reward preferences. While some travelers may benefit greatly from the perks that come with a travel credit card, stay-at-homes may prefer a simpler cash-back credit card that rewards their everyday purchases. Take some time to explore the different options to find the most useful card for your lifestyle and spending habits.
*Amazon Prime Rewards Visa Signature card information was collected independently by CreditCards.com. The issuer did not provide details and is not responsible for their accuracy.
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The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.