Types of Credit Cards

At Delancey Street, we want to help you understand the different types of credit cards available, so you can choose the best option for your needs and financial situation. With so many credit cards on the market, it can get confusing to figure out which one is right for you. This article will break down the most common credit card types, how they work, and who they are best suited for.

Cash Back Credit Cards

Cash back credit cards give you a percentage of your spending back in cash rewards. For example, you might earn 1-6% back on all purchases. Cash back rewards are deposited into your account, applied as a statement credit, or redeemed for gift cards.Cash back cards are great for people who don’t want to deal with points or miles. They offer straightforward rewards that can help offset your spending. These cards are best for those who pay off their balances in full each month, since the rewards can be negated by interest charges if you carry a balance.Some popular cash back cards include:

  • Citi® Double Cash Card – Earn 2% cash back (1% when you buy, 1% when you pay)
  • Chase Freedom Unlimited® – Earn 1.5% cash back on all purchases
  • Discover it® Cash Back – Earn 5% cash back in rotating quarterly categories

Travel Rewards Credit Cards

Travel rewards cards allow you to earn points or miles on your spending that can be redeemed for travel. This includes flights, hotels, rental cars, cruises, and more. Many cards also offer travel perks like priority boarding, lounge access, and statement credits.These cards are great for frequent travelers. You can earn free flights, hotel stays, and other travel redemptions. The value you get from the rewards depends on how you redeem them. Travel cards have higher annual fees, so make sure the perks and rewards justify the cost.Some top travel rewards cards include:

  • Chase Sapphire Preferred® Card – Earn 2x points on travel and dining
  • Capital One Venture Rewards Credit Card – Earn 2x miles on all purchases
  • Platinum Card® from American Express – Earn 5x points on flights and hotels

0% Intro APR Credit Cards

0% intro APR credit cards offer a 0% interest rate for a set period of time after opening the account, usually between 12-21 months. This intro period applies to both new purchases and balance transfers from another card.These cards allow you to finance large purchases interest-free, as long as they are paid off before the intro period ends. They also let you transfer and pay down existing debt without incurring more interest. Just be sure to make payments on time, since most cards charge high penalty APRs if you miss a payment.Some 0% intro APR cards include:

  • Citi® Diamond Preferred® Card – 0% for 21 months on balance transfers
  • Wells Fargo Reflect® Card – 0% for 18 months on purchases and balance transfers
  • Chase Freedom Unlimited® – 0% for 15 months on purchases

Balance Transfer Credit Cards

Balance transfer credit cards are similar to 0% intro APR cards, except they only offer a 0% intro rate on balance transfers from another card, not new purchases. This can allow you to consolidate debt from multiple cards onto one card and pay it off over time without interest.These cards typically charge a balance transfer fee between 3-5%. It’s important to have a payoff plan, since the 0% rate expires after 12-21 months. Balance transfer cards require good credit to qualify.Some examples of balance transfer cards include:

  • Citi® Double Cash Card – 0% for 18 months on balance transfers, 3% fee
  • Wells Fargo Reflect® Card – 0% for 18 months on balance transfers, 3% fee
  • BankAmericard® credit card – 0% for 18 months on balance transfers, 3% fee

Business Credit Cards

Business credit cards are designed for small business owners and entrepreneurs. They offer rewards on business-related purchases and perks like employee cards and accounting tools. Some key benefits include earning rewards, separating personal and business expenses, and building business credit.Business cards generally require good personal credit to qualify. You should have a business or side gig to apply, but you don’t need to run a full-time business. If you have significant business expenses, a business card can help maximize your spending.Some popular business cards include:

  • Ink Business Preferred® Credit Card – Earn 3x points on travel, shipping, internet, and more
  • Capital One Spark Cash Plus – Earn 2% cash back on all purchases
  • The Business Platinum Card® from American Express – High welcome offer and travel perks

Student Credit Cards

Student credit cards are designed for college students who are new to credit. They have lower credit limits and lighter requirements compared to standard cards. Student cards help young people establish credit history, which is key for getting approved for loans and cards in the future.Student cards typically don’t offer robust rewards programs or bonuses. But they make it easy for students to start building credit with responsible use. Many issuers also provide educational resources on credit topics.Some student cards to consider include:

  • Discover it® Student Cash Back – Earn cash back rewards and get your first late fee waived
  • Bank of America® Cash Rewards Credit Card for Students – Earn 1-3% cash back rewards
  • Deserve® EDU Mastercard for Students – Build credit with no annual fee

Secured Credit Cards

Secured credit cards require an upfront security deposit that becomes your credit limit. The deposit helps offset the risk for the card issuer since you can only spend up to your deposit amount. Secured cards are designed for people with bad credit or no credit history.The card issuer reports your payment activity to the credit bureaus each month. With responsible use, a secured card can help you establish credit or rebuild credit. Once you build credit, the issuer may graduate you to an unsecured card and refund your deposit.Some secured card options include:

  • Discover it® Secured Credit Card – Earn cash back rewards while building credit
  • Capital One Secured Mastercard® – Get access to higher credit line after 5 months of payments
  • OpenSky® Secured Visa® Credit Card – Easy approval process regardless of credit score

Retail Credit Cards

Retail credit cards are tied to a particular store and can only be used at that retailer. Store cards tend to have high interest rates but offer discounts or rewards for purchases at that store. Retail cards are easy to qualify for but should be used sparingly and paid off each month.Some examples of retail cards include:

  • Target RedCardTM – Get 5% off Target purchases and free shipping
  • Amazon Prime Rewards Visa Signature Card – 5% back at Amazon.com and Whole Foods
  • My Best Buy® Visa® Card – Earn 5% back in rewards at Best Buy

Choosing the Best Credit Card for You

With so many credit card options, it can be hard to choose the right one. Here are some tips:

  • Consider your credit – Make sure you can qualify for the card you want
  • Review costs – Watch out for annual fees, interest rates, and penalties
  • Check rewards – Pick a card that aligns with your spending habits
  • Read the fine print – Understand the terms before you apply
  • Set a budget – Only charge what you can afford to pay off

The most important thing is paying your bill on time and in full each month. This helps you avoid interest charges and maximize the benefits of your card. Be sure to shop around and compare several cards before deciding. We hope this overview of credit card types was helpful. Reach out to Delancey Street anytime if you need assistance picking the best card for your needs.

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