With so many credit cards out there to choose from, it might seem tough to narrow down the best type of credit card for you.
Credit cards can be very useful to get valuable perks, earn plenty of rewards, and improve your credit.
Learn the key benefits of each type of credit card so that you can choose the best type of credit card that matches your financial habits.
What Are the Best Types of Credit Cards?
There are a variety of credit cards tailored to meet the needs of different kinds of consumers.
Each card has its own unique features.
The ideal card for you depends on factors like your credit, lifestyle, spending habits, and what you’re willing to pay in fees and interest.
Here’s an overview of the various types of credit cards on the market.
Best Credit Cards for Bad Credit or No Credit
580 or lower credit score
If you have a low credit score or are just starting out and don’t have any credit, a bad credit or no credit card can come in handy.
You’ll be able to make everyday purchases and improve your credit situation at the same time.
How bad-credit cards work
While your options may be limited, there are quite a few bad credit or no credit cards at your disposal.
Some of them are secured cards, which require a deposit.
Most also offer rewards you can enjoy while you build or improve your credit.
Tips and tricks to get the most out of cards for bad or no credit
No matter which bad credit or no credit card you choose, make sure you always make your payments on time.
Even one missed payment can take a toll on your credit.
When looking for a credit card for consumers with bad credit or no credit, prioritize cards with no fees.
Best Balance Transfer Credit Cards
580–669 credit score
If you’re overwhelmed with high-interest debt, a balance transfer card can make your life easier.
You’ll be able to streamline the debt payoff process and save some money on interest while you’re at it.
How balance transfer cards work
Balance transfer credit cards let you move your current credit card debt to a new card, with a lower interest rate.
These cards often come with a 0% APR promotional period where you won’t pay any interest if you repay your balance before the period is up.
In most cases, this period is anywhere from six to 21 months.
Tips and tricks to get the most out of balance transfer credit cards
Some balance transfer cards charge a fee so make sure the fee is worth the potential savings before you make the switch.
Strive to pay off your balance before the intro period ends or you may get stuck with a sky-high interest rate that puts you back into the same debt situation.
Best Student Credit Cards
If you’re a college student who earns money and would like to build credit, student credit cards are ideal.
Just make sure you commit to responsible borrowing.
How student credit cards work
A student credit card usually has a lower credit limit than a traditional credit card.
If you make several, on-time payments, however, the credit card company may increase your limit.
Unlike secured credit cards, which require a deposit, student credit cards are unsecured so you don’t need a deposit to take one out.
Student credit cards also offer basic rewards like cash back and gift cards.
Tips and tricks to get the most out of student credit cards
To build a positive credit history, always pay your credit card by its due date.
Keep your credit utilization or the ratio between your credit limit and credit card balance at 30% or below.
When shopping for a student credit card, prioritize cards with $0 annual fees.
Best Cash Back Rewards Credit Cards
670-799 credit score
Almost anyone can benefit from getting a cash back rewards card which provides cash that you can use in any way you’d like.
Unless you’re a frequent flyer or tend to carry a balance, you can’t go wrong with a cash back rewards card.
How cash back rewards credit cards work
Cash back credit cards give you a percentage of cash back every time you make a qualifying purchase.
If a card offers 1.5% cash back, for example, you’ll earn 1.5 cents in cash back rewards for every dollar you spend.
While some cash back cards offer a flat percentage on all purchases, others offer higher percentages on certain spending categories like dining or gas.
Tips and tricks to get the most out of cash back rewards cards
Take a look at your previous credit card or bank account statements and figure out what types of purchases you spend the most on every month.
Then, find a cash back card that will pay the most for your unique spending habits.
If you spend a lot on groceries, for example, choose a cash back that offers 5% cash back on grocery purchases.
Best Travel Rewards Credit Cards
670-799 credit score
If you travel often for business, pleasure, or both, a travel rewards card should be on your radar.
It can help you accumulate points and miles quickly, which means you’ll save plenty of money on free travel.
How travel rewards credit cards work
With travel rewards credit cards, you can earn rewards that you may later redeem toward travel.
You may score free airline tickets, first-class upgrades, free nights at your favorite hotels, exclusive airport lounge access, and more.
Tips and tricks to get the most out of travel credit cards
Try to use travel cards for everyday purchases, not just travel expenses. By doing so, you can rack up more travel rewards faster.
Also, be on the lookout for travel cards that offer welcome bonus miles or points (you’ll have to meet the qualifying bonus requirements).
In addition, travel rewards credit cards tend to come with attractive perks that will improve your travel experience (e.g., statement credits on certain purchases, airport lounge access, and car rental insurance coverage).
Best Gas Rewards Credit Cards
670–739 credit score
If you drive a lot for work or love road trips, a gas rewards credit card is a great option.
Since gas purchases can add up quickly, this type of credit card can make driving more affordable.
How gas credit cards work
A gas credit card can allow you to earn rewards at the fuel pump which you can later redeem for cash back, gift cards, and more.
Many gas credit cards offer 3% to 5% in savings on gas you purchase at any gas station or at a certain gas station chain.
Tips and tricks to get the most out of gas rewards credit cards
Be mindful about the type of gas credit card you choose. Before you commit to one, consider your gas buying habits.
If you prefer to gas up at a particular gas brand, choose a card that will reward you for being loyal to it.
Once you decide on a card, find out if there are caps on your rewards per year or quarter.
Best Business Credit Cards
670-799 credit score
If you own a business, business credit cards are worth exploring as they can save you money on business-related expenses.
You may qualify for one if you own a large or small venture or consider yourself a sole proprietor, freelancer, limited liability company, or corporation.
How business credit cards work
Business credit cards are intended for business expenses, like computers, office supplies, and travel.
Compared to personal credit cards, they usually have higher limits.
Many of them also come with rewards like welcome bonuses, cash back, and travel points.
Some even offer short-term financing for large purchases.
Tips and tricks to get the most out of business credit cards
If possible, pay your vendors and suppliers with your business credit card so you can maximize your regards.
Also, encourage your employees to use the card for business purchases rather than requiring them to use their own cards and requesting a reimbursement.
You’ll earn more rewards and show your employees you trust them.
Best Credit Cards for Good Credit
670-799 credit score
If you’ve worked hard to achieve good credit, you should take advantage of good credit cards.
These cards offer exciting offers and rewards that are usually not available to those with bad credit.
How credit cards for good credit work
Good credit cards offer a plethora of benefits to satisfy every cardholder with a solid credit history.
Whether you’re a frequent flyer in search of impressive travel perks or prefer cash back or a 0% intro APR, you’re sure to find it.
Tips and tricks to get the most out of credit cards for people with good credit
Do your research before you commit to a card and choose an option that offers a great rewards program for your lifestyle and spending habits.
You may also want to use multiple cards with different perks so you can truly maximize your rewards.
Best Luxury Perks Credit Cards
740-850 credit score
If you have solid credit and like to treat yourself to nice things and experiences, a luxury perks card might be a good fit.
These cards may also make sense if you prefer a high-end travel experience without breaking the bank.
How luxury perks credit cards work
There are an exciting array of luxury perks cards out there, each with their own set of features and benefits.
As long as you qualify for one and use it responsibly, you can enjoy concierge services, complimentary airport lounge access, travel upgrades at select properties, a credit for the TSA precheck application fee or global entry, and more.
How to get the most out of credit cards with luxury perks
Most luxury perks cards come with a hefty annual fee so make sure the benefits of the card you choose outweighs its fee.
Also, before you decide on a card, consider which perks you value most and how you’d like to redeem your rewards.
Don’t forget to compare welcome offers and the spending requirements you’ll need to meet to earn them.
Credit Cards vs. Personal Loans: Pros & Cons
Should you use a credit card or a personal loan when looking to finance a large purchase, pay for an emergency, or consolidate your debt? Compare credit cards vs. personal loans and weight the pros and cons.
Our Methodology: How We Chose the Best Credit Cards
We looked at over 20 credit cards in each of the categories to see which features stood out the most.
Those features included APRs, fees, rewards, and cardholder credit scores. You can look at those same features when choosing a card.
What to Look for When Choosing Your New Credit Card
Not all credit cards are created equal. When you shop around for a new credit card, be sure to consider the following.
Credit score
The card you’re able to get will depend largely on your credit score.
Before you apply for any cards, you should find out what your credit score is and tailor your search to the credit cards you’ll qualify for.
FICO credit scores generally fall into the following categories: Exceptional: 800-850 Very Good: 740-799 Good: 670-739 Fair: 580-669 Poor: 300-579
Annual percentage rate (APR)
The APR is the amount of interest you’ll accrue when you carry a balance. These are the various types of APRs you may find, including:
Fixed interest rate
A fixed interest rate remains the same for the entire time you keep a balance on your card.
Variable interest rate
Variable rates move up and down over time based on changes in the market.
Introductory APR
An introductory APR is a lower-than-usual APR that you get for a set time period when you open a credit card account.
Purchase APR
The purchase APR is the interest applied to any credit card purchases that you don’t pay in full.
Balance transfer APR
A balance transfer APR is the interest rate you’ll pay on any debts you transfer to a credit card.
Cash advance APR
Cash advances APRs are usually very high and charged for the privilege of taking out a cash advance.
Fees
Most credit cards come with several fees, such as:
Annual fees
Some credit cards charge users a fee every year. These fees can range from $95 to $500.
Late payment fees
If you pay your credit card bill late, you might be on the hook for a late fee.It can be up to $29 for a first-time instance and up to $40 for subsequent violations.
Balance transfer fees
A balance transfer fee occurs when you transfer debt from one credit card to another. This fee is usually between 3% to 5% per transfer.
Cash advance fee
If you use your credit card to get fast cash, you’ll have to pay a steep cash advance fee. Most credit card companies charge 3% or 5% per advance.
Returned payment fees
If you schedule an automatic credit card payment but don’t have enough funds in your bank account, the payment might be returned. In this case, you’ll be charged a returned payment fee, typically up to $40.
Rewards
There are a variety of credit card rewards which include:
Cash back
Most cash back cards allow you to earn a certain percentage of cash based on your spending. Some will accrue points that you can convert into a dollar value.
Points
You may redeem credit card points for a number of rewards. These may include cash back, gift cards, travel, and merchandise.
Miles
Credit card miles reward you for spending money with specific airlines and other travel companies. You can put your miles toward low-cost or free flights and other travel expenses.
Credit Cards and Your Credit Score
Fortunately, there are credit cards available for people with all types of credit scores.
You can find a credit card if you have bad, fair, good, or excellent credit.
There are even options out there if you have no credit at all. But the credit cards with the best rates, terms, and rewards are reserved for those with good credit.
How to check your credit score
1. You may visit a free credit scoring website that will update your score every week or month.
2. If you already have a credit card, check with your credit card company as they may allow you to check your score for free.
3. Another option is to reach out to a nonprofit credit counselor who can keep tabs on your credit and help you with your finances.
What to do if your score isn’t high enough to get a regular credit card
1. If your credit score is low or you don’t have any credit history, don’t worry. You can get a secured credit card, which requires a cash deposit.
2. If you don’t pay your credit card bill, the company can take your deposit. In most cases, the deposit is equal to your credit limit.
3. As long as you use a secured card responsibly, you may qualify for an unsecured card in the future.
How using a credit card can improve your credit
1. Be sure to pay your bill by the due date, every time as even one missed payment can ding your credit.
2. To ensure you never miss a payment, you may want to enroll in autopay.You can always make your minimum payment via autopay and cover the remaining balance or a portion of it separately.
3. Do your best to stay below 30% of your credit limit.
Credit Card Pros and Cons
Just like all financial products, credit cards come with benefits and drawbacks, including:
Credit Card Pros
Credit Card Cons
Frequently Asked Questions
How does a credit card compare to a debit card?
With a credit card, you can borrow money directly from a credit card company and make at least the minimum payment at the end of each billing cycle.
If you don’t pay off the entire balance, you’ll be on the hook for interest charges.
A debit card, on the other hand, pulls money directly from your bank account so you won’t have to pay any interest on it.
What information do I need to apply for a credit card?
Fortunately, it’s fairly easy to apply for a credit card.
All you have to do is submit an application through the credit card company’s website.
In most cases, you’ll need to provide your full name, date of birth, address, Social Security number, and annual income.
How long does it take to get a credit card?
There are many credit card companies that offer instant approvals for credit card companies when you apply online.
Others take anywhere from five to 10 business days to make their decision.
Upon approval, you should receive your credit card in the mail. You can use it as soon as you activate it.
What does a credit card pre-approval mean?
If you receive a pre-approval for a credit card, the credit card company has confirmed that you meet its requirements and are a good candidate for its products.
To receive the credit card and start using it, you must go through the formal application process.
While your chances of getting approved are high, there’s no guarantee.
