10 Types of Credit Cards: A Beginner’s Guide

types of credit cards

In today’s modern world, a credit card is one of the most convenient and effective financial instruments to use for payments and purchases. It is a line of credit provided by a bank or other financial institution that enables you to borrow money to purchase products and services from merchants.

The convenience of accessing credit is one of the main advantages of a credit card. Moreover, credit cards are an excellent way to build credit and can boost one’s spending power.

There are different types of credit cards available for you to choose from depending on your needs. This article will give you key information on the top 10 types of credit cards that you can take advantage of for their features.


1. Starter Credit Cards

A starter credit card is a certain type of credit card intended for those with little to no credit history, such as young individuals or students, who want to establish a credit history to get future loans.

In other words, a starter credit card is for credit card beginners. It is easier to get a starter credit card from credit card providers or financial institutions because the application requirements and standards are less onerous.

Starter credit cards can give you access to the credit system which you can use for payments and purchases. Plus, you can start building a solid credit history as long as you use these cards properly and pay your bills on time each month.


2. Rewards Credit Cards

Rewards credit cards are a special kind of credit card that gives rewards each time you use them and pay your credit card bills on time.


This type of credit card gives you some sort of reward — usually in the form of cashback, points, or travel miles — every time you use your credit card to make purchases or payments.


Rewards credit cards allow you to put your rewards to use in a variety of ways depending on the particular rewards credit card you have.

The easiest way to get the most out of a rewards credit card is to choose one that rewards your current spending patterns and offers rewards that are in line with your goals, such as shopping and travel goals.


3. Travel Credit Cards

Travel credit cards are credit cards made expressly to be used for paying for travel expenses. They are similar to rewards credit cards in that they offer rewards when you use them to make travel-related purchases like flights and hotels.

The rewards you get from travel credit cards are tailored specifically for travel. You can earn rewards such as flexible travel credits which you can apply to any travel-related purchase or earn travel points that you can transfer to airline or hotel programs.

These types of credit cards are the best for people who frequently use credit cards to pay for travel expenses, such as business travels, meetings, or even personal reasons for ongoing travel. Not only can you take advantage of the credits for your travel expenses but also the rewards which you can apply to your future travel.


4. Cashback Credit Cards

Cashback credit cards let you use credit to cover expenses and make purchases, while additionally allowing you to earn a percentage of the cash you spend using the card. It’s like a discount from qualified purchases because a percentage of your payment will be returned to you.

For example:

  • You would receive 1.5 cents in cash back for every dollar you spend if your credit card offered 1.5 percent cash back on every transaction. Most cashback credit cards give a fixed percentage back on all transactions while others give larger cash-back rates on common items like groceries or gas.

In other words, the amount you can get as cash back for using your credit card will depend on the terms and conditions set by the credit card provider.


5. Student Credit Cards

A student card is similar to a starter credit card but is made expressly for students who haven’t yet established any credit history and would like to while still enrolled in school.


Student credit cards work as a standard credit card in which you can use its credit system and pay a bill for your monthly credit transactions; however, student credit cards are intended exclusively for individuals attending college.


Student credit cards typically have simple eligibility restrictions and standards that vary by the financial institution and credit card issuer. It can be a helpful tool as you finish school if you use it responsibly, allowing you to pay for necessary expenses and establish credit at the same time.

In addition, student credit cards can also have rewards programs or even cash back.


6. Business Credit Cards

A business credit card is a type of credit card that is specifically designed for business use. Businesses of all sizes can use this form of credit card for business-related expenses, and it can help them establish a credit history to get better borrowing conditions in the future.

Business credit cards offer features similar to other credit cards and can also earn rewards like:

  • Cashback
  • Points
  • Travel miles
  • Other benefits (depends on the credit card and the provider)

The main difference is that you must have a registered business or other income-generating activity to be eligible for a business credit card.

The ideal credit card for business use should have a significant rewards program, the ability to track expenses, allow you to save from business expenses, and offer other features that improve your bottom line.


7. Co-Branded Credit Cards

Co-branded credit cards are credit cards that are the outcome of a cooperative relationship between a certain retailer and a credit card issuer. Therefore, they produce a credit card with the business’s branding and offer loyal customers perk-specific advantages.

Co-branded credit cards enable you to take advantage of greater benefits from particular businesses, such as:

  • Particular airlines
  • Hotels
  • Stores

For example, an Amazon credit card can be used to purchase things from the Amazon store. By using the Amazon credit card, you will receive various benefits that you may not receive by using another credit card.

To put it another way, a credit card company partnered with Amazon so that anyone who has an Amazon co-branded credit card can use it to buy any items from the Amazon store and receive larger points than they would by using a different credit card or shopping at a different store.


8. Store Credit Cards

A store credit card is a credit card that can only be used at a certain chain or retailer. For example, a Target REDcard™ Credit Card can only be used in all Target stores, including online.

In comparison to using cash or using another credit card to make purchases at Target, using the Target credit card will result in specific high benefits. It is best to get a store credit card and use it to take full advantage of its benefits if you frequently shop at a particular store or have a favorite store where you regularly buy things.

Many popular and huge stores offer store credit cards for you to take advantage of. Here are some of the most popular store credit cards available:

  • Lowe’s Advantage Card
  • Bloomingdale’s Credit Card
  • TJX Rewards® Platinum Mastercard®
  • Amazon Prime Rewards Visa Signature Card
  • My Best Buy® Visa® Card
  • JCPenney Credit Card


9. Secured Credit Cards

A secured card is a credit card that requires you to make an upfront cash deposit to secure your credit line. It is because the majority of credit cards are unsecured, which means you are not required to put up any amount as collateral or security for you to borrow money from the credit card provider.

A secured credit can be an excellent option for you if you need to start building credit from the beginning or want to restore your credit after facing some financial challenges. Secured credit cards are simple to get approval for as long as you have the minimum deposit, and they let you use them responsibly to improve your credit score.

For instance, you can apply for a secured credit card and make a $500 down payment to get a $500 credit limit. Once approved, you can take advantage of the same benefits of a regular credit card and earn rewards.


10. Unsecured Credit Cards

Unsecured credit cards are the exact opposite of secured credit cards. You can get approved for unsecured cards without having to put down a security deposit.

Unsecured credit cards are specifically called unsecured because they’re not backed up with collateral. However, unsecured credit cards have stricter requirements and standards, ranging from average to exceptional credit scores.

Unsecured credit cards are the typical credit cards issued by credit card companies that let you use credit and pay a bill each month for your monthly transactions. These cards are ideal for people with average to excellent credit ratings.

With some credit cards, you can also establish outstanding credit while earning rewards depending on your spending and payments.


Work With 121 Financial Credit Union in Choosing the Best Credit Card Option

Credit cards are a convenient way to pay for everyday essentials and expenditures while also earning rewards and perks when used properly. You can select one or more credit card types, depending on your demands, that can satisfy those needs and assist you in managing your finances.

Given how essential a credit card is, you should get assistance from a trustworthy financial institution to assist you to choose the best type of credit card for you. 121 Financial Credit Union is a top-ranked credit union in Northeast Florida and offers a broad variety of premium banking and financial services, provided with cutting-edge technology and personalized service.

Our experts at 121 Financial Credit Union are equipped with the necessary knowledge and resources to help you find a credit card that is specifically tailored to your needs and financial goals.

From credit cards that are suitable for your current situation to finding a credit card that perfectly suits your needs and goals and enables you to take advantage of all benefits and features, we’ve got you covered.

Contact us today and learn more about how we can help you find the best types of credit cards for you.

Back to Blog

Related Articles

7 Smart Investment Tips For Beginners to Start Their Investing Journey

In today’s economy, it’s wise to find ways to grow your money. Investments are the best option,...

Beginner's Guide to Investing: How to Start Investing In 5 Easy Steps

Investing your money can be one of the best decisions of your life if you manage to pull the right...

How Does APR Work on Credit Cards?

When it comes to shopping for or comparing credit cards, or even understanding a card you already...