The Different Types of Credit Cards Explained

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The Diner’s Club card, introduced in 1950, was the first widely-used charge card. The card could only be used at restaurants and a few select hotels. American Express National Bank, Member FDIC, issued its first card in 1958, which had to be paid in full each month, much like some of the cards they still issue today. The same year, Bank of America’s revolving credit card came on the scene — and with it, a notable amount of documented cases of card delinquency and fraud.

Flash-forward to today and credit cards are still very much the same in some ways, though in others they’re also quite different. One thing is for sure, however — there are now more different types and options of credit cards than ever. And while credit cards still come in one shape and size, they certainly aren’t all alike. 

The Three Different Types of Credit Cards

There are three basic categories of credit cards. They’re determined by how the card’s credit works. 

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Prepaid Cards

A prepaid credit card has a limit based on the amount the cardholder preloads onto the card. It’s accepted like a regular credit card, but account holders spend the loaded funds instead of buying items on credit. Once the money is gone, the cardholder must load additional funds before the prepaid card can be used for further purchases.

Secured Cards

A secured credit card requires a cash deposit as collateral for the credit line. It works differently than a prepaid card in that credit is extended to the cardholder. The card is not paid with the deposited funds unless the cardholder defaults.

The credit limit for a secured card is sometimes the same as the deposit amount. Some card issuers extend a higher credit line than the deposit amount. Secured credit cards charge interest on balances not paid in full, and interest rates are often higher than on unsecured cards.

A secured cardholder can usually get a collateral deposit back in two ways. They can pay off the card in full and close the account. Alternatively, if the cardholder has a good payment history, they can see if the card issuer will convert the card to an unsecured card and refund the deposit.

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Unsecured Cards

An unsecured card is the typical idea of a credit card. No collateral deposit is required for an unsecured credit card. These cards generally have lower interest rates and higher credit limits than secured cards. There are several different types of unsecured credit cards. Many offer rewards based on spending.

Good To Know

Visa and Mastercard are not types of credit cards. Rather, they are card processing networks. The four major credit card processing networks include Visa, Mastercard, American Express and Discover.

Different Types of Unsecured Credit Cards

Here’s a look at the different categories of unsecured credit cards.

Rewards Credit Cards

A rewards credit card is essentially a loyalty card that rewards cardholders a percentage of every purchase, typically in points or cash-back. Rewards percentages vary by the card issuer and card type, but it’s not uncommon to see rewards ranging from 1% to 5% of purchases. Some cards are tiered with specific categories of purchases with each one earning a different percentage than other purchase categories.

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A cash-back rewards card may allow users to receive cash back as a statement credit, check or direct deposit. Cash-back rewards may also be converted into points that can be used for gift cards or merchandise.

Travel and gas rewards are two more popular types of rewards cards. Travel rewards cardholders can redeem points for travel-related goods like airline tickets and hotels. Gas rewards cards typically reward free gas, a discount on gas or merchandise.

Balance Transfer and 0% APR Cards

Balance transfer cards and 0% APR cards are not necessarily types of credit cards, but they’re commonly categorized as a type of card. They’re technically a credit card offer.

A balance transfer is the transfer of a card balance in full or in part from one card to another. A cardholder will often transfer a higher-APR balance to a card with a lower APR, sometimes even a 0% APR for a limited time. Many rewards credit cards allow balance transfers.

A 0% APR offer is good for a limited period, like a balance transfer card. Cardholders can carry a balance for a specified number of months without paying interest. Once the offer period is over, the card begins charging interest at its standard APR.

Store Cards

A store card is a credit card that can often only be used at one specific store, such as Home Depot or Sephora. It’s also becoming more common for stores to offer Visa or Mastercard rewards options that can be used anywhere. Many store cards allow cardholders to earn rewards on store purchases for discounts on later purchases from the store.

Charge Cards

The primary difference between a charge card and other unsecured cards is that a charge card balance must be paid in full each month. Charge cards have become less and less common. American Express still offers charge cards but also allows some cardholders to get approval to make payments on certain types of purchases.

Student Credit Cards

A student card is a credit card designed to help college students establish credit. They work the same as any other unsecured credit card, but they don’t require a credit score to qualify. Most only require the applicant to be at least 18 years old, enrolled in school at least part-time and have a source of income.

Types of Credit Cards: Technology

Today’s credit cards use a few different types of technology to hold and transmit cardholder data, and some cards use more than one type. Here are the three most common:

  • Magnetic Stripe: Cardholders’ credit card information is stored on the card’s magnetic stripe and is read when the card is swiped through a card reader. These cards are the least secure, and some card issuers are phasing them out.
  • EMV Chip Cards: A microchip on the card stores the cardholder’s data, which is read when the card is inserted into a chip card reader.
  • Contactless Cards: These cards use radio frequency identification technology that allows cardholders to hover their card over a terminal or tap it to transmit their card information.


There are several ways to classify the different types of credit cards. Whether secured or unsecured, store cards or charge cards, or Visa or Mastercard, understanding the different types can help prospective cardholders choose the type of card that best meets their needs.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

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About the Author

Andrea Norris has been in the web publishing business for the past 15 years both as a content contributor and a copy editor specializing in personal finance, frugal living, home and auto topics. She writes both short and long-form content and is well-practiced in SEO keyword research and writing.
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