Lecture Notes: Different Types of Credit Cards

Key Takeaways

• Rewards Credit Cards: Ideal for everyday purchases, offering cash back or points.
• Travel Credit Cards: Suitable for frequent travelers, often co-branded with airlines or hotels.
• Secured/Student Credit Cards: Useful for building credit, especially for new users.

Choosing the right credit card involves understanding one's spending habits, personal goals, and desired rewards.

Types of Credit Cards

Rewards Credit Cards

• Offer rewards for spending, redeemable as:
  • Statement credit
  • Travel purchases
  • Direct deposit
  • Gift cards
• Example: Bilt Mastercard offers flexible rewards.

Cash Back Credit Cards

• Earn rewards through spending, redeemable for cash or statement credit.
• Types:
  • Flat rate (e.g. Citi Double Cash Card offers 2% back)
  • Bonus categories (rotating or set)
• Bankrate Tip: Discover it Cash Back for high rewards in rotating categories.

Travel Credit Cards

• Rewards for travel-related purchases (flights, hotels, rentals).
• Earn points/miles; flexibility in redemption.
• Examples:
  • Capital One VentureOne Rewards
  • Chase Sapphire Preferred
  • American Express Gold Card

Business Credit Cards

• Separate business and personal expenses.
• Offer rewards on business spending (cash back, travel points).
• Key features:
  • Generous rewards
  • Expense tracking
  • Bottom-line boosting features

Corporate Credit Cards

• For established businesses with significant revenue.
• Do not require personal guarantees.

Student Credit Cards

• Designed for students, easy approval.
• Helps build credit history.
• Typically no annual fee.
• Examples: Discover it Student Cash Back, Capital One Quicksilver Student.

Secured Credit Cards

• Requires a cash deposit as collateral.
• Helps build/rebuild credit.
• Examples: Capital One Platinum Secured, Discover it Secured.

Co-branded Credit Cards

• Partnered with specific brands (stores, airlines, hotels).
• Rewards usually limited to a single brand.

Airline Credit Cards

• Rewards within a specific frequent flyer program.
• Benefits: Priority boarding, lounge access.

Hotel Credit Cards

• Points within hotel loyalty programs.
• Benefits: Free nights, late check-out.

Store Credit Cards

• Offered by retail stores, can be used only at specific retailers.
• Higher interest rates, potential for deferred interest.

0% APR/Balance Transfer Cards

• Useful for managing debt or making large purchases.
• Interest-free periods for a set time (12-21 months).
• Post-period, regular APR applies.

Choosing the Right Credit Card

• Considerations:
  • Current credit cards
  • Preferred rewards
  • Financial goals
  • Credit score
• Use tools like Bankrate's CardMatch for personalized recommendations.

Conclusion

Selecting the best credit card depends on one's financial needs and goals. The card should offer a combination of rewards and features that enhance financial wellness.