The Different Types of Credit Cards Explained

Man at cafe using credit card and laptop for online payments.
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Offers for credit cards are everywhere. In your mailbox. In your mail. Online when you make a purchase. At the register in the store, when the associate asks if you’d like to apply for a card.

The offers are everywhere you look. But what’s the difference between them? Should you open a store-branded card when you already have a general, all-purpose credit card? While credit cards come in one shape and size, they certainly are not all alike. Read on to learn about the different types of credit cards and how each one in your wallet functions differently.

The Basics: General Credit Cards

These are the two types of general credit cards you might encounter.

Secured Credit Card

A secured credit card requires you to make a cash deposit as collateral for your credit line. After you make a certain number of on-time payments, you typically can convert a secured credit card to an unsecured card. A secured credit card is ideal for people who have had credit challenges in the past or for those just starting with credit, so be sure to choose a secured credit card provider that reports activity to major credit bureaus so that your on-time payments will be recorded. Note that the interest rates generally are higher with secured credit cards, so paying it off monthly should be a goal. Responsible use of a credit card will help you in the future to qualify for loans or other credit opportunities.

Earn More Perks From Your Credit Card

Unsecured Credit Card

This is the general definition of a “credit card.” No security deposit is required for an unsecured credit card. They typically come with lower interest rates than secured credit cards along with higher credit limits. That’s important because credit scores are based, in part, on credit utilization ratio – or the percentage of your credit you have tied up. Unsecured credit cards often offer rewards based on your spending.

The Next Step: Rewards Cards

Credit cards have evolved through the years from a way to make convenient payments or spread out the cost of purchases, to valuable financial tools available to consumers through rewards programs.

Rewards cards generally fall into three categories — cash back, points or travel rewards — and finding one that best fits your spending patterns can maximize your benefits. It isn’t an easy task. There are dozens of card promotions for you to sift through to see which will put your rewards at a premium. Note that the best cards require higher credit scores and could come with an annual fee, but they also could come with introductory promotions as well.

Earn More Perks From Your Credit Card

Rewards typically come in the form of statement credits, cash, gift cards or travel perks, depending on your card.


  • The Discover it Cash Back Card pays 5% cash back on everyday purchases at various types of retailers, which rotate by quarter. These include grocery stores, restaurants, gas stations and even Amazon as part of the rotation. All purchases have at least a 1% cash back reward, plus there’s no annual fee and a 0% introductory interest rate for 14 months on your purchases.
  • The Citi Custom Cash Card offers 5% cash back on purchases in the cardholder’s top eligible spending category, up to the first $500 spent each billing cycle, with 1% cash back on anything else you buy. Points can be redeemed for a statement credit, direct deposit or check, gift cards or to pay for purchases on
  • The CapitalOne VentureOne card offers 1.25 miles per dollar on every purchase, and there’s no annual fee. For the first 12 months, account holders won’t pay any interest on purchases, either, and those who spend at least $500 within the first three months of opening the account will earn 20,000 bonus miles. Those miles never expire and they can be redeemed for a variety of rewards, including airplane tickets with no blackout dates, rental cars, hotels, cruises and even ride-sharing.

Remember as you weigh the offerings to consider other factors such as the availability of balance transfers at low or zero interest rates during a promotional period.

This could allow you to do two things at once: move into a good rewards card and also save money when you switch your balance to another card. You’ll pay a balance transfer fee, generally 3% to 5%, but you still could save a considerable amount of money in interest.

Cards for Specific Users

Since credit cards aren’t one-size-fits-all, some users might need to explore a bit more to find their perfect card. That includes students and business owners.

Student credit cards offer perks and help younger adults build credit. The Discover it Chrome for Students, for example, gives 2% cash back on gas and restaurant spending and $20 cash back for every year that you keep a GPA of 3.0 or higher. The card has no annual fee, and you can apply the rewards as a credit toward your bill, deposit to your bank and more. It includes a 0% interest rate for the first six months on purchases.

Business credit cards can be used to keep business expenses separate from personal ones. You also can give employees cards for business purchases. Most business cards offer rewards for spending, too.

Good To Know

The Chase Ink Business Preferred card, for example, offers unlimited 1.5% cash back rewards on every purchase made for your business. There’s a $0 annual fee, and it also offers a 0% interest introductory rate as well as a $750 bonus if you spend $7,500 on purchases in the first three months after account opening. This type of card can be a great way to rack up points while organizing your business expenses.

Store and Gas Rewards Credit Cards

A store or gas rewards credit card is usually only good at the retailer that issues it. Retailers like Macy’s offer generous perks such as 20% off your first two days of card purchases — up to $100 — plus coupons in the mail and other rewards.

Many gas cards offer cash back on gas purchases at their stations; the ExxonMobil Smart Card, for example, gives cardholders 6 cents off per gallon at all Exxon or Mobil stations. Plus, a current promotion through Jan. 31 provides 30 cents off every gallon of fuel at Exxon and Mobil stations for a limited time.

Although these cards typically carry no annual fee, their use is limited. But they have some merit for frequent visitors to a particular retailer or gas station.

What’s the Best Credit Card for Me?

The easiest way to find the best credit card is to analyze your own financial situation. Are you a student? Do you have a spotty credit history? Are you a world traveler? There are cards for each of these situations.

Once you’ve narrowed down the best category, compare current credit card offers for those specific types of cards. Factor in the costs, both in terms of interest expense and annual or balance-transfer fees, to narrow the list down to a few standout choices.

John Csiszar contributed to the reporting for this article.

Editorial Note: This content is not provided by Citibank. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been endorsed by Citibank.

Editorial Note: This content is not provided by the companies mentioned. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by the companies mentioned.

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.

About the Author

Jami Farkas holds a communications degree from California State University, Fullerton, and has worked as a reporter or editor at daily newspapers in all four corners of the United States. She brings to GOBankingRates experience as a sports editor, business editor, religion editor, digital editor — and more. With a passion for real estate, she passed the real estate licensing exam in her state and is still weighing whether to take the plunge into selling homes — or just writing about selling homes.

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