There’s a card out there for everyone, no matter your financial situation.
Confused about which credit card to get? It’s time to clear the air with our guide to the different types of cards on the market.
Once you’ve finished reading, you’ll know which type of card is best for you. Then you can compare the best credit cards within categories, finally settling on one. With any luck (and the right credit score), you’ll soon receive a shiny, new card in the mail.
Types of credit cards at a glance
|Card type||Card purpose||Examples||For…|
|Standard credit card||General use for everyday spending.||Cards with no frills and reasonable rates.||The average spender.|
|Rewards cards||Earn cash back and travel perks.||Cards with signup bonuses, miles, cash back and other perks.||Travellers and those with higher credit scores.|
|Credit repair cards||Help build or rebuild your credit score.||Secured credit cards and prepaid cards.||People with bad credit or no credit.|
|Specialty cards||Varies by card.||Business credit cards, store credit cards, etc.||Specific types of users.|
Compare credit cards
Standard credit cards
Standard credit cards are what you might imagine when you think of “normal” or “regular” cards. They don’t come with the bells and whistles of rewards cards, but they tend to offer solid benefits like a competitive APR and zero or low annual fees.
Two popular kinds of standard credit cards
Low interest cards
A low-interest card may mean one of two things:
- You’ll get a low interest rate forever, like an 8% fixed-rate APR. The typical credit card APR hovers around 19.99%.
- You’ll get a long intro APR period. For example, you could get a 5% purchase APR for 6 months. After 6 months, the APR might go up to 19.99% — at which point your card isn’t really a low-interest card anymore.
A low-interest card is useful if you like to pay off your balances over long periods of time. It’s also a good choice if you’re making an expensive purchase soon and need time to pay it off.
Balance transfer cards
A balance transfer card gives you a sweet incentive to move your debt to another card provider. Namely, it offers a low interest rate on balance transfers — often 0% — for a specified period of time. If you’re looking to dodge high interest rates for a while, a balance transfer card could help you get on top of your debt.
Rewards credit cards
For most people, rewards cards bring all the fun. You don’t just get the convenience of a credit card — you also get perks for spending money.
For all rewards cards, you’ll typically need a good to excellent credit score of 650 or higher.
Two popular kinds of rewards cards
Cash back cards
Cash back cards return a percentage of your spending back to you. For example, if you spend $10,000 on your card and get 1% cash back, you’ll receive $100.
Typically, you’ll receive a cheque in the mail or a deposit directly into your account at the end of the year, however you may be able to use your cash back as statement credit.
As you spend with a travel card, you’ll receive points or miles that you can later redeem for flights, travel experiences and merchandise.
You’ll usually find three types of travel cards: general, hotel and airline cards.
General travel cards offer rewards that you can spend on a variety of travel expenses. You can often redeem rewards for flights, hotels, cruises, merchandise and even rental cars. Because these cards are flexible, they’re very popular among travellers.
Credit repair cards
If your credit score is too low to qualify for a rewards card, look for a credit repair card. This type of card is relatively easy to get. It won’t offer eye-popping rewards, but it’ll allow you to rebuild your credit score.
Three popular kinds of credit repair cards
A secured card is an excellent option if you have poor credit. You’ll need to put down a security deposit to open the card. However, you have a good chance of being approved for it, even if you’ve had a bankruptcy. Best of all, you can use it to build your credit as long as your card provider reports your payments to the credit bureaus.
Subprime cards are aimed at customers who can’t get credit anywhere else. Unfortunately, they often come with expensive activation fees, high APRs and shady terms.
Consider getting a secured card instead, or apply for a personal loan if you need funds quickly.
The easiest way to understand a prepaid card is to think of it like a gift card. Before you can use one, you have to load it with funds. Then just swipe it like a normal credit card.
However, unlike a normal card, you don’t use a prepaid card to borrow money – you’re only allowed to spend the funds you’ve preloaded. Once you spend the money, you have to reload your card before you can use it again.
Specialty credit cards
Five popular kinds of specialty credit cards
Business credit cards
A business credit card typically gives more points or miles on business-related expenses, such as office supplies, phone bills and dining. It may also offer additional business perks like free employee cards, higher credit limits and expense reports. This type of card is a good choice if you want to separate your business and personal expenses.
Student credit cards
As a university or college student, it’s an excellent idea to get a credit card. You can start building your credit well before you need it, and you can learn how to manage your money responsibly.
You might not have a credit history yet, which means it could be tough to get approved for most credit cards. That’s where a student credit card can help — it’s designed for someone new to credit.
You won’t find amazing rewards with this type of card, but you can use it to build your credit.
Store credit cards
You can typically only use a store credit card at specified stores.
Beyond that restriction, you can use the card like a normal credit card, charging purchases to it and carrying a balance if you’d like. This type of card typically offers store-specific perks to keep you coming back, such as free gifts or big discounts.
Gas credit cards
If you spend a lot on gas, consider a gas credit card. You’ll usually find two different types of gas cards.
One type are brand-specific cards that reward you for pumping at specific gas stations. A brand-specific card will likely give you fuel credits or a discount on fuel — say, $0.03 off each litre of gas.
The other type you can find includes many rewards cards that offer cash back or more points when you use your credit card at gas stations. You can usually pump your gas at any station in order to reap these rewards.
Charity credit cards
There are typically two types of charity credit cards: cards that donate a portion of your spending to a specific charity and cards that allow you to donate your points or miles to charity (instead of making cash donations). Aside from donating some of your spending or points, you are not required to further donate to the charity.
What is a charge card?
When you think about credit cards, you’re probably thinking of cards that you can carry balances on. But there’s another lesser-known type of credit card: the charge card.
With a charge card, you can’t carry a balance each billing cycle — you have to pay your card bill in full each month. Because of this, a charge card isn’t a good choice if you typically need more time to pay off your balance.
One reason you may be surprised to see charge cards is because they’re rarely offered anymore. The only major card provider that offers them is American Express.
What’s the difference between credit cards and debit cards?
With a credit card, you can pay for things by borrowing money from your card provider. With a debit card, you first deposit funds with your provider and then use the card to spend the money you’ve deposited.
Each card comes with advantages and disadvantages:
- You can’t get into debt with a debit card, because you’re only spending money you actually have. On the downside, you don’t get the protections offered by a credit card, and you can’t borrow money.
- A credit card lets you pay off balances over time, earn rewards, build your credit and offers great protection against fraud. But if you’re a compulsive spender, a credit card can be a dangerous friend.
Bottom line: Pick up a credit card if you spend responsibly and can pay your bills on time. Otherwise, stick to a debit card or pick a secured card with a low credit limit.
How debit cards work