8 common credit card types and the best use for each

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A credit card can be a tool for earning cash back, collecting travel rewards, separating business spending or building credit. In practice, though, these categories often overlap. A cobranded card can also function as a travel rewards card, and business or student cards may also earn cash back.

Knowing how the main card types differ can help you narrow down the one that fits your needs. Below are eight widely used credit card categories, along with how they work and what to think about before applying.

Cash-back credit cards

Cash-back credit cards return a percentage of what you spend back to you.

Some of these cards pay higher rewards in certain bonus categories, such as drugstores or gas. Others offer a simple flat rate on every purchase, while some feature rotating bonus categories that change every quarter.

Depending on the card, rewards can often be redeemed as a statement credit, a deposit into a bank account or a gift card, which makes them easy to use.

Many cash-back cards have no annual fee, although some higher-earning options do charge one.

Examples of cash-back credit cards include:

Rewards credit cards

Rewards credit cards earn cash back, points or miles on purchases, and many also offer bonus earnings in categories such as dining or groceries.

Depending on the program, cardholders may redeem rewards for statement credits, gift cards or travel. Transferable-rewards cards may also allow you to move your points or miles to participating airline and hotel partners.

These cards are a strong fit for people who want flexibility in how they redeem rewards. Cards with transferable points can be especially valuable for travelers who prefer access to multiple airline and hotel programs rather than being locked into one brand.

Some examples of rewards cards include:

Travel rewards credit cards

Travel credit cards earn rewards that can help offset travel costs. Most offer bonus rewards on travel-related spending, and many include perks designed to make trips smoother or more comfortable.

Some travel cards earn transferable points, such as American Express Membership Rewards or Chase Ultimate Rewards, which can be moved to other participating rewards programs.

Some travel cards have no annual fee, but most charge between $95 and $895. Higher fees often come with richer benefits, such as TSA PreCheck or Global Entry credits, airport lounge access, travel insurance coverage and elite status with a specific hotel chain.

Some top travel cards include:

Cobranded credit cards

Cobranded credit cards are created through partnerships between recognizable brands and card issuers, such as Alaska Airlines and Bank of America.

They earn rewards in the partner brand’s loyalty program, which makes them especially useful for people already loyal to that brand. For instance, airline cobranded cards let cardholders earn points or miles in a particular frequent flyer program.

Airline cobranded cards may include benefits such as a free checked bag, priority boarding and airport lounge access. Hotel cobranded cards often come with perks like free nights, elite status and statement credits.

Some examples of cobranded credit cards include:

Store credit cards

Store cards are issued through partnerships between retailers and card issuers and may provide discounts, loyalty rewards or financing options for purchases at the named store.

Closed-loop store cards can only be used at the issuing retailer or its affiliated brands, so they tend to work best for shoppers who regularly buy from the same chain.

Other retail cards are open-loop and can be used elsewhere. In general, retail cards with a network logo such as Visa or Mastercard can be used wherever that network is accepted.

Retail cards may offer a 0% annual percentage rate (APR) or deferred-interest financing for spending at a specific store.

Some examples of store credit cards include:

The information for the Prime Visa has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Business credit cards

Like personal cards, business credit cards can offer points, airline miles or cash back, and they can also be grouped into categories such as travel or cash back.

If you qualify for a business credit card, your company spending can earn rewards too. Many business cards also include bonus earnings in business-related categories such as advertising, internet services and office supplies.

One major reason to use a business card is to keep business expenses organized and avoid mixing them with personal transactions.

Some top business cards include:

Student credit cards

Student credit cards are designed as starter cards for young people who have not yet built a credit history.

They are generally easier to qualify for, although approvals often come with a low credit limit. That limit may increase over time if the cardholder shows responsible use, such as paying on time.

Most student cards do not charge an annual fee and usually offer modest rewards, such as cash back on purchases or a bonus for good grades.

After graduation, some issuers let you keep the student card, while others may provide a path to convert it into a standard credit card.

Secured credit cards

Secured credit cards are meant for people with limited or poor credit histories who want a card but cannot qualify for an unsecured one. They require an upfront cash deposit that serves as collateral before the issuer grants a credit limit.

The deposit is held in a secure account and is not accessible until you close the card or move to an unsecured product.

For example, a secured card with a $500 credit limit usually requires a $500 deposit. If you are unable to pay your balance later, the issuer can use that deposit to cover the debt.

Because secured cards report payment activity to the credit bureaus, they can be useful for people trying to build or rebuild credit, including after financial hardship such as bankruptcy.

Bottom line

For many people, a no-annual-fee cash-back card is a practical place to start because it offers simple rewards without an ongoing cost.

If you travel often, compare the value of a travel rewards card’s perks with its annual fee.

And if your main goal is to build or rebuild credit, focus first on eligibility, fees and reporting to the credit bureaus rather than on rewards.

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