Chime® is a financial technology company, not a bank. Banking services, credit, and debit card provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.

7 Types of Credit Cards

In this article

  1. Standard/unsecured credit cards
  2. Secured credit cards
  3. Rewards credit cards
  4. Cash back credit cards
  5. Store credit cards
  6. Business credit cards
  7. Travel credit cards
  8. The type of credit card you choose should support your goals
  9. FAQs

If you want to apply for a credit card, find out what choices are available to you. Learn about how different types of credit cards work so you can choose the best option.

Choncé Maddox • July 7, 2023

Credit cards can be an excellent tool to help you build credit or earn rewards. Sometimes, a low-interest credit card can help you cover a significant expense and pay the balance off with predictable monthly payments.

With so many types of credit cards available, choosing the right one that meets your needs can be challenging. Knowing the features of each type of credit card and how it works can help you find the best match. In this roundup, we’ll cover all the different types of credit cards, including some key benefits and drawbacks to consider.

Standard/unsecured credit cards

Standard credit cards are the most common type of credit card since they are unsecured and don’t require collateral or a down payment. These credit cards offer a credit limit based on your credit. The better your credit score, the better terms you’ll likely receive.

Throughout the month, you can borrow against your credit limit. You’ll need to pay the minimum payment amount at the end of the monthly billing cycle to avoid paying fees. If you carry a balance at the end of each billing cycle, you’ll be charged interest based on that balance amount.

Here are some key features of standard credit cards:

  • Higher credit limit based on your credit score.
  • The standard interest rate, or APR, is around 20.99%, depending on the specific credit card.1
  • May have a variable interest rate that changes based on the market.2
  • Some credit cards have other fees like annual, late payment, and foreign transaction fees. Read the fine print and understand what fees may apply to your account.
Pros:Cons:
Variety of card optionsMay not qualify with poor credit
Higher credit limit with a good credit scoreSome cards have more fees and high interest
Pay off purchases over timePotential to overspend

Secured credit cards

Secured credit cards require a cash deposit for collateral. This deposit often ranges from $100 to $300 and serves as your limit to borrow against. Like with a standard credit card, you’ll need to make a minimum monthly payment.

Your payments are reported to the three major credit bureaus – Experian, Equifax, and TransUnion – to help you build and increase your credit score.

Here are some key features of secured credit cards:

  • The credit limit is based on the amount of your deposit. Some card issuers may increase your credit limit after a few months if you use your card wisely and make timely payments.
  • You may be able to upgrade your secured card to an unsecured card after a few months if the card is used wisely.3
  • Some secured credit cards also charge an annual or monthly fee and may have a variable interest rate.4
  • You could get your initial security deposit returned if you pay off your balance in full and close the card account.5
Pros:Cons:
Easy to qualify forUpfront deposit required
Helps you build creditLower credit limit
Could upgrade to an unsecured card in the future

Start building credit with the secured Chime Credit Builder Visa® Credit Card – no credit check required.*

Rewards credit cards

Rewards credit cards offer you points or cash back rewards for purchases. The rewards are based on your spending. Some cards offer rewards for all purchases, while others only provide awards for purchases in specific spending categories.

You can redeem rewards for travel, cash back, a statement credit, gift cards, merchandise, or other rewards, depending on the card. This type of credit card is best for people with a good or excellent credit score who make a significant amount of monthly card purchases, including money spent on shopping, travel, and dining.

Here are some key features of rewards credit cards:

  • The credit limit is based on your credit score, and rewards cards are typically geared toward people with excellent credit.
  • Some cards may have an annual fee.
  • Many rewards cards offer a sign-up bonus allowing you to earn a lump sum of reward points or cash back once you spend a certain amount during the first few months of opening your card.
  • Some rewards cards limit the cash back or total points you can earn in a given quarter or calendar year.
Pros:Cons:
Earn rewards for everyday spendingWon’t qualify with poor credit
Optional sign-up bonusSome cards have an annual fee
Tiered rewards in select categories for some cardsSome cards have reward limits

Cash back credit cards

A cash back credit card is a specific type of rewards card that provides cash back to reward your purchases. Cash back credit cards typically offer a fixed rate of cash back per $1 spent on your card. Others offer tired cash back rewards based on your spending categories.

For example, one card may give you 5% cash back on every $1 spent at grocery stores, 3% cash back on fuel at gas stations, and 1% back on all other purchases. A credit card like this could help you save money by earning extra cash on everyday purchases instead of earning rewards.

Rewards are typically redeemed as a statement credit, a check, or a deposit into your bank account.

Here are some key features of cash back credit cards:

  • The credit limit is based on your credit score and is typically geared toward people with excellent credit.
  • Several cash back cards don’t have an annual fee.6
  • Some cards may offer a higher cash back bonus for certain spending categories.
Pros:Cons:
Earn cash back for everyday spendingMay not qualify with poor credit
Maximize rewards in specific spending categoriesSome cards have an annual fee
Different reward redemption optionsSome cards have reward limits

Store credit cards

Store credit cards are available through retail stores and usually can only be used at a particular chain of stores. These credit cards may also offer discounts, cash back, other rewards, and exclusive benefits like free shipping or extended warranties.

Here are some key features of store credit cards:

  • Store cards tend to have higher interest rates and fees than other credit card types.
  • Rewards are limited and only available through the specific store or retailer.
  • These cards also tend to have lower limits which can lead to overspending if you’re not careful.7
Pros:Cons:
Earn rewards for shopping at your favorite storeLimited use (often can’t use at other stores)
Receive benefits like store credit, free shippingHigher interest rates and fees
May save money on purchasesLower credit limits

Business credit cards

A business credit card is a smart option if you have a business or are self-employed. These cards help business owners keep expenses separate from personal expenses. They can also provide rewards for business-related spending.

Business credit cards have higher limits or no preset credit limit, which is helpful when making larger business purchases.

Here are some key features of business credit cards:

  • Some cards offer a sign-up bonus or low introductory APR.8
  • Card issuers will also consider your credit score and business details when considering you for a card. Have your business’ tax identification number on hand when applying.
  • Business credit cards offer rewards like points to redeem for travel and cash back. The higher spending caps can maximize rewards.
  • Some cards also offer business owners certain perks, like discounts on accounting services.
Pros:Cons:
Higher credit linesNeed business details to apply
Helps build business creditTypically need good or excellent credit
Earn rewardsRisk of carrying a high balance

Travel credit cards

Travel credit cards offer reward points or miles that can be redeemed for travel expenses like flights, hotels, and car rentals. These cards also offer travel-related benefits like travel insurance, airport lounge access, and baggage protection.

Travel credit cards are a natural fit for people who travel often and want to earn rewards to supplement the cost of traveling. However, these credit cards may have higher interest rates and fees than others.

Here are some key features of travel credit cards:

  • The credit limit is based on your credit score. Travel cards are typically geared toward people with excellent credit.
  • Many travel cards offer a sign-up bonus allowing you to earn a lump sum of bonus points or cash back for spending a certain amount during the first few months.
  • Some travel cards have an annual fee and foreign transaction fee for purchases made in other countries, but others don’t.
Pros:Cons:
Earn rewards to redeem for travelNeed good or excellent credit to qualify
Sign-up bonusesSome cards have high annual fees
Additional travel perksMay not be worth the cost if you don’t travel much

The type of credit card you choose should support your goals

Choosing the right type of credit card will depend on your financial needs, lifestyle, and spending habits. Your credit score can also affect the types of credit cards you qualify for.

Having more than one credit card can also help you improve your score and earn different benefits and rewards. Just be sure not to take on more cards than you can comfortably handle.

FAQs

What are the 4 types of credit cards?

Four of the most common types of credit cards include standard or unsecured cards, secured cards, rewards cards, and store cards. Travel cards often fall under the category of a rewards credit card.

What are the 7 types of credit?

Several types of credit cards are available, including standard credit cards, secured cards, rewards cards, cash back cards, store cards, travel cards, and business cards. Depending on your needs and current credit score, you may not qualify for every type of credit card. Read the terms and conditions before applying for and accepting a new credit card, including fees, rewards, interest rates, and credit limit options.

What are basic types of credit cards?

The most basic type of credit card is a standard unsecured card, also known as a traditional credit card. There are many standard credit cards, and you may need fair or good credit to qualify. If you want to rebuild your credit score, consider getting a secured credit card, which is easier to qualify for.

Chime® is a financial technology company, not a bank. Banking services are provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card and the Chime Credit Builder Visa® Credit Card are issued by The Bancorp Bank, N.A. or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit and credit cards are accepted. Please see the back of your Card for its issuing bank.

While Chime doesn’t issue personal checkbooks to write checks, Chime Checkbook gives you the freedom to send checks to anyone, anytime, from anywhere. See your issuing bank’s Deposit Account Agreement for full Chime Checkbook details.

By clicking on some of the links above, you will leave the Chime website and be directed to a third-party website. The privacy practices of those third parties may differ from those of Chime. We recommend you review the privacy statements of those third party websites, as Chime is not responsible for those third parties' privacy or security practices.

Third-party trademarks referenced for informational purposes only; no endorsements implied.

Opinions, advice, services, or other information or content expressed or contributed here by customers, users, or others, are those of the respective author(s) or contributor(s) and do not necessarily state or reflect those of The Bancorp Bank, N.A. and Stride Bank, N.A. (“Banks”). Banks are not responsible for the accuracy of any content provided by author(s) or contributor(s).

* To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Chime Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems not to be a qualifying direct deposit are not qualifying direct deposits.

1 Information from the Federal Reserve's "Consumer Credit Current Release" as of June 26, 2023: https://www.federalreserve.gov/releases/g19/current/

2 Information from HelpWithMyBank.gov "How often can the bank change the rate on my credit card account?" as of June 19, 2023: https://www.helpwithmybank.gov/help-topics/credit-cards/interest-rates/interest-rate-change-often.html

3 Information from Consumer Finance's "Building Credit From Scratch" as of June 19, 2023: https://files.consumerfinance.gov/f/documents/201612_cfpb_credit_invisible_checklist.PDF

4 Information from Capital One's "Platinum Secured Credit Card" as of June 19, 2023: https://www.capitalone.com/credit-cards/platinum-secured/

5 Information from Discover's "Discover It Secured Credit Card - Can I get my security deposit back?" as of June 19, 2023: https://www.discover.com/credit-cards/secured/

6 Information from Nerd Wallet's "13 Best Cash Back Credit Cards of 2023" as of June 19, 2023: https://www.nerdwallet.com/best/credit-cards/cash-back

7 Information from Chase's "Can You Use Score Credit Cards Anywhere?" as of June 19, 2023: https://www.chase.com/personal/credit-cards/education/basics/understanding-store-credit-cards

8 Information from Bank of America's "Business Advantage Customized Cash Rewards Credit Card" as of June 19, 2023: https://www.bankofamerica.com/smallbusiness/credit-cards/<

© 2013-2024 Chime. All Rights Reserved.