Here's how to choose the right credit card to make the most of rewards, build good credit, and stay debt-free.

By Hiranmayi Srinivasan
March 22, 2021
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When it comes to choosing a credit card, you have hundreds of individual offers to select from. The credit card that you ultimately decide upon (or qualify for) has to do with a number of factors including your credit score, credit history, lifestyle, and spending habits. 

There are three major types of credit cards based on the type of user: general consumer, student, and business. However, when you look at these credit cards by feature, you'll discover many options, making it very important to review all details carefully in order to choose the card that's truly right for you. Here is a breakdown of 10 different types of credit cards to help you identify an option that fits your needs. 

1
No Annual Fee Credit Card

True to its name, these credit cards charge you $0 in yearly membership fees and monthly maintenance fees. According to WalletHub, about 9 in 10 credit cards do not charge an annual fee, including some that offer rewards, 0% APR, and have no foreign transaction fees. Credit cards that do not have an annual fee are available to people of all credit levels, so if you're just starting to build credit and don't want to get bogged down with paying annual fees (which can range anywhere from $25 to $550 according to a study by ValuePenguin) then a credit card with no annual fee might be best for you.

However, according to NerdWallet, an annual fee might not always be a bad thing. Credit cards that charge annual fees might actually save you money in other areas by offering better perks like more cash back or points that can be redeemed for travel. Some credit card companies also waive the annual fee for your first year of membership.

Here are 2021's best no annual fee credit cards according to Card Ratings.

2
Student Credit Card

The length of your credit history is one of the main factors impacting your credit score—which is why it's good to start building credit early in life. Student credit cards are a great way to do this, with many offering at least 1% to 5% cash back and no annual fees. To qualify for a student credit card, you have to be 18 years old and must be able to prove you have enough independent income to at least pay the monthly bills. If you don't have adequate income yet, a parent or guardian can add you as an authorized user on their credit card to help you start building the credit essential for things like renting an apartment or buying your first car.

Here are 2021's best student credit cards according to WalletHub.

3
0% Purchase APR Credit Card

These types of cards are interest-free on all purchases for a set number of months after you open the account. The best 0% APR cards will give you 15 to 18 months with no annual fees, but the average interest-free period is 11 months. After that, you will be charged a regular APR of around 18% on purchases and any balance you may have. Credit cards that offer 0% APR to new members are great for big purchases that you want to take your time paying off. Make sure you check your credit score though, because most 0% APR credit cards require good to excellent credit and generally have higher interest rates.

Here are 2021's best 0% APR credit cards according to Card Ratings.

4
Cash Back Credit Card

Earn points as you spend with cash back credit cards. The points earned using this card can be redeemed for cash, credit, or gift cards. Cash back credit cards are also available for those with fair, bad, or limited credit histories, but you'll get the best cash back rates if you have good to excellent credit. A credit score of 700 or above is considered good credit, with anything above 800 qualifying as excellent according to Experian. Some cash back cards will give you points for a certain type of purchase, like buying groceries or gas.

Here are 2021's best cash back credit cards according to NerdWallet.

5
Store Credit Card

Next time you make that $100 dollar Target run that was supposed to be for "the essentials" you might consider opening a store credit card. Lots of stores offer big discounts on your first purchase after opening a card with them, and as an added bonus, do not charge annual fees. These cards are good if you find yourself spending a lot at a specific store, or have just average credit and want to improve your score at a low cost. However, Credit Karma warns users to monitor their spending with store credit cards—as they tend to have high interest rates and low credit limits and can end up hurting your credit. Credit Karma also advises to check with the store to make sure your payment history is being reported to credit bureaus if you're using the card to build credit.

Here are 2021's best store credit cards according to WalletHub.

6
Travel Rewards Credit Card

If you've got the travel bug (as many of us do after being cooped up for a year), signing up for a travel rewards card that earns you points or miles as you spend might be a great option. Some cards only let you redeem points with the hotel chain or airline they're partnered with, while others allow for redeeming points with any hotel or airline. Some offers may be tempting like a card that offers you 20,000 points when you first sign up. However, these cards may also require you to spend anywhere between $500 to $4,000 in the first few months to get the points. WalletHub recommends choosing a travel rewards card that will be easy for you to redeem. Selecting a card that fits your lifestyle and spending habits is a good way to maximize the points earned so you can make the most out of those post-pandemic travel plans.

Here are 2021's best travel rewards cards according to Card Ratings.

7
Balance Transfer Credit Card

Right now, the average U.S. household owes about $7,000 in revolving credit card charges according to a study by NerdWallet. If you're struggling to pay off credit card debt, a balance transfer card will let you pay off the remaining balance of another card for a low interest rate. Balance transfer cards usually offer 0% APR for a set number of months when you sign up. This option can be good for lowering the total amount you have to pay off—but make sure you calculate what you will be paying with transfer fees (3% on average) and whether you will be able to pay off your debt within the 0% APR period. Most balance transfer credit cards require a good or excellent credit score for approval.

Here are 2021's best balance transfer cards according to WalletHub.

8
Charge Card

Unlike a normal credit card, a charge card has no limits on how much you can spend—but you need to pay your balance in full at the end of every month. If you don't pay off your balance on time, you will be charged with a late fee and after a couple of missed payments, your card can be canceled. The charge cards with the best perks and rewards—like more points per dollar you spend—all have lofty annual fees and require good to excellent credit. If you are clear on the terms, can make consistent payments, and the rewards are worth the annual fee then a charge card might be the right move for you.

Here are 2021's best charge cards according to WalletHub.

9
Secured Credit Card

A secured credit card is great if you have no credit history, a limited one, or your credit needs improving because they almost always approve and send monthly reports to the major credit bureaus. Most secure cards require you to put down a minimum $200 refundable security deposit that also acts as your credit limit. So if you open a secure card and put down $500, that is your spending limit. The amount gets refunded back to you when you close your account (after the balance is paid off) or if you are not approved for the card. The annual fees (if there is one) are much cheaper, and secure cards offer rewards as well.

Here are 2021's best secured credit cards according to Card Ratings.

10
Business Credit Card

Business credit cards are a convenient option for small business owners, giving them access to higher credit lines and options to earn rewards while buying business essentials like office supplies. If you are a business owner (or a freelancer or gig worker) with a limited credit history, qualifying for a business credit card is easier than qualifying for a loan. But business credit cards have higher interest rates than loans, and are not protected like consumer credit cards, meaning the company can suddenly increase interest rates. This can end up hurting you and your business if you are not able to pay off your monthly balances. WalletHub recommends a 0% APR consumer card instead for business owners looking for financing options.

Here are the best business credit cards according to NerdWallet.