6 Different Types of Credit Cards Explained: Which is Best For Your Needs?

Credit cards can be a convenient way to make purchases, but with various options available it’s important to understand the different types so you can choose ones suited to your needs and spending habits. This article from Dealnew will explore the major credit card categories including regular, secured, store, low-interest, cash-back, and travel rewards cards. By learning the key features of each, you can determine which are best for paying bills, earning rewards, or building credit.

Regular/Standard Credit Cards

If you’re looking for a classic credit card to use for everyday purchases and benefits like rewards, then a regular or standard credit card may be the best fit. These go-to cards require monthly payments but offer rewards programs for purchases. Popular options include Visa, Mastercard, and American Express.

When considering a standard card, look at the interest rate. Rates vary and can be close to 20% if you carry a balance, so aim for a lower percentage if possible. Most charge an annual fee of $95-150, though some waive fees for good account management. Major cards provide rewards like 1-5% cash back on spending categories that rotate each quarter. Points can be redeemed for gift cards, travel, or even statement credits. Carefully read the fine print on reward redemption as some programs require minimum thresholds.

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Secured Credit Cards

For individuals looking to establish or rebuild credit, a secured card posts a security deposit upfront in lieu of a credit limit. The deposit amount, often $200-500, becomes the spending limit. Secured cards work and report to the credit bureaus just like regular cards.

Approval is easier with no credit check or bare minimum qualifications required. Using and paying on time builds a positive payment history. Within 6-18 months, the issuer may upgrade to an unsecured card and refund the deposit. Downsides include lower spending power and fewer rewards than standard cards. Nevertheless, secured cards provide a responsible way for non-credit users to demonstrate creditworthiness over time.

Store Credit Cards

Department store cards allow exclusive discounts and financing options specific to that retailer. Popular store cards include ones from Macy's, Target, and Home Depot. Aside from extra savings at checkout or special promos, they earn 5-25% back in rewards on purchases to redeem in-store.

However, credit limits tend to be relatively low and interest rates on deferred interest promotions can exceed 25% if not paid off in full within promotional periods. Only use store cards if truly planning to pay the full balance each month. The unique discounts don't offset costs of expensive revolving debt. And like with any single creditor, missed payments severely damage that relationship. Reserve store cards for planned purchases only.

This article continues on Dealnew's website with discussions of low interest cards, cash back cards, travel rewards cards and a conclusion. Check it out at dealnew.com for the full breakdown of different credit card options.

Low-Interest Credit Cards

While rewards are enticing, balance transfers and avoiding interest should take priority if carrying debt. Low-interest cards provide temporary respite from high APRs through promotional periods ranging from 6-21 months. During this window, variable APRs averaging 13-19% are substantially better than standard cards' 20%+ rates.

Look for sufficient intro periods and verify post-promo rates to ensure you can pay off transfers before higher pricing kicks in. Some cards are marketed as low-interest charge annual or balance transfer fees, so factor those costs. Reward programs are usually weaker as issuers aim to attract customers shifting balances. Used strategically though, low interest cards can save hundreds in interest if preventing penalties and high ongoing costs.

Cash Back Credit Cards

Maximizing cash-back benefits requires choosing cards aligned with spending categories. Flat-rate cards like Citi Double Cash provide consistent 1-2% cash back on all purchases, whereas rotating category cards like Discover offer 5% in bonus quarters. Quarterly bonus categories tend to include gas, dining, groceries, Amazon, and wholesale clubs.

Annual caps capped rewards and expiration clocks require watching as well. Popular flat-rate cards have no cap whereas category cards limit quarterly cash back to a few hundred dollars. Expired rewards one year past the quarter also occur, so monitor statements. Those focused heavily on one or two categories likely gain the most by matching cards to habits. Others enjoying a range of places benefit from versatile flat-rate cards.

Travel Rewards Credit Cards

Savvy travelers leverage travel rewards cards to earn miles and points redeemable for flights, hotels, and car rentals. Major issuers like American Express, Chase, and Citi run programs for airline partners and hotel brands. Points can buy award seats and nights or convert to travel statement credits. While carrying balances incurs high interest, utilizing rewards cards for everyday spending multiplies travel value.

Ensuring continued good account standing is key as issuers may claw back or reduce rewards for late or missed payments. Likewise, many points expire after one to two years of inactivity, so maintaining regular spending prevents losses. Frequent flyers consolidate points across issuers and alliances for maximized awards. With responsible use, travel rewards cards yield free trips worth thousands in value.

Conclusion

In summary, there are numerous credit card structures meant for various credit profiles and monetary goals. Choosing cards tailored to individual circumstances sets users up for benefits instead of debt traps. Regular cards provide everyday perks, secured cards build credit from the start, store cards save in-network, low interest helps debt management, cash back matches categories, and travel cards fund dream vacations. By gaining a full perspective on options, consumers can identify which cards fit their needs and spending patterns best of all.

So in deciding what’s right, research thoroughly, use prudently, and pay on time. Doing so transforms plastic into rewarding financial tools. Feel free to check Dealnew regularly for more tips and recommendations on maximizing credit cards.

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