TPG founder Brian Kelly is a Bilt adviser and investor.
Credit cards come in a variety of flavors and cater to a diverse audience. For example, if you prefer a credit card that earns travel or hotel rewards, you can pick from cobranded cards from a specific airline or hotel chain or a general travel card that will earn you flexible reward points.
If you prefer earning cash back or you want a credit card that’s tailored toward a specific store, they also have those. Today, we’ll go over eight different types of credit cards, showing you how they work and what they have to offer.
Rewards credit cards
Rewards credit cards offer some form of cash back or points on all purchases, and many offer bonus points on specific categories such as travel, dining, groceries and gas.
Rewards credit cards give cardholders numerous ways to redeem points, including statement credits, gift cards, travel and transfers to airline and hotel partners.
Some examples of reward credit cards include:
Related: 17 best rewards credit cards
Cash-back credit cards
Cash-back credit cards offer a percentage of money back on purchases made with the card. Some cash-back cards offer an elevated earning rate for specific bonus categories, while others offer a flat rate on all card purchases.
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Bonus cash-back cards can target fixed categories that include travel, drugstores and gas, while some cash-back credit cards entice cardholders with rotating bonus categories that change quarterly.
You can redeem the cash back you earn in a few ways, such as statement credits, direct deposit into your bank account and gift cards. Some cash-back cards have relatively low annual fees, while others have no annual fees. Depending on your spending habits, it may be better to have a flat-rate cash-back card or one that offers bonus cash back in specific categories.
Examples of cash-back credit cards include:
Related: Top cash-back credit cards
Travel credit cards
Travel credit cards are designed to make travel more affordable by awarding you points that you can redeem for travel-related expenses. Most travel credit cards will award you with bonus points on travel-related purchases.
Some travel cards offer transferable points, like Chase’s Ultimate Rewards points or American Express’ Membership Rewards points. These are points that can be transferred to other participating rewards programs.
Most travel credit cards come with annual fees ranging anywhere from $95 to $695. Higher annual fees usually translate to more lucrative rewards and other perks, such as TSA PreCheck or Global Entry benefits, airport lounge access, complimentary travel-related insurance coverage, and elite status for a specific hotel chain.
Some of the top travel credit cards include:
Related: Best travel cards
Business credit cards
A business credit card can help business owners separate their business and personal expenses. Business credit cards offer varying rewards, such as points, airline miles or cash back, and can often be divided into categories such as travel or cash-back credit cards.
If you own a business and are eligible to apply for a business credit card, you can earn rewards alongside what you are earning from your personal credit cards. And many business credit cards offer bonus rewards in business-related spending categories, such as advertising, internet services and office supplies.
Of course, the main reason to have a business credit card is to keep track of your business expenses and avoid mixing business and personal transactions.
Some top business cards include:
Related: Best business credit cards
Student credit cards
Student credit cards are beginner credit cards made for young people who have yet to establish their credit. As such, student credit cards are fairly easy to obtain; however, don’t be surprised if you are approved with a low credit limit. Most student credit cards do not have an annual fee and offer fairly limited rewards such as cash back on purchases or a bonus for good grades.
My first credit card was the Discover it® Student Cash Back, and I was initially approved with a $500 limit. Despite the low limit, my spending habits and positive behaviors, such as on-time payments, led the issuer to increase my credit limit within a year.
The information for the Discover it Student Cash Back card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related: The best credit cards for college students
Secured credit cards
Secured credit cards are designed for borrowers with poor credit history who want a credit card but cannot be approved for an unsecured one. Secured credit cards require you to provide money upfront to be used as collateral before the issuer will extend a credit limit.
The funds are held in a secure account that you cannot access until you either close the credit card or qualify for an unsecured credit card.
For example, if you want a secured credit card with a $500 credit limit, most issuers will require a $500 deposit. If, at some point, you are unable to pay off the balance, the issuer can use the collateral to clear your debt.
Secured credit cards report your payment history to the credit bureaus, making them ideal for those looking to rebuild their credit after a difficult financial situation, such as bankruptcy.
Related: Best secured cards
Cobranded credit cards
Cobranded credit cards involve partnerships between well-known brands and credit card issuers such as Citi, Chase, Bank of America and American Express. Cobranded cards that partner with an airline earn miles with its specific frequent flyer program, whereas hotel cobranded cards earn points with a specific hotel chain.
Cobranded airline credit cards may include benefits such as a free checked bag, priority boarding and airport lounge access, whereas cobranded hotel credit cards include perks such as elite status, statement credits and free nights.
Some examples of cobranded credit cards include:
Related: Best credit cards for air travel
Store credit cards
Store credit cards are similar to cobranded credit cards in that the credit card issuer partners with a specific retail store, offering enhanced rewards to entice cardholders to shop there. Most store credit cards can only be used at a specific store, though some can be used elsewhere.
Store-branded credit cards may offer cardholders a 0% annual percentage rate, or APR, or deferred interest plans when spending at a specific store. For example, my first store-branded credit card was a Best Buy credit card, which I opened to help finance home appliance purchases as the card offered deferred interest for 24 months.
Some examples of store credit cards include:
Related: The best store credit cards
Bottom line
As you can see, there are many different types of credit cards available, catering to frequent travelers, avid shoppers, students and more. If you’re in the market for a new credit card, you’re bound to find something that fits your spending habits, credit profile and how you prefer to earn and redeem credit card rewards.
You’ll likely need to do some research, but finding the right credit card will help you organize your finances and earn valuable rewards.
For rates and fees of the Bilt Mastercard, click here.
For rewards and benefits of the Bilt Mastercard, click here.
