Which Type of Credit Card is Right for You?

Evaluate the features of various types of credit cards offers through Credit.com. Our advisors weigh in on the pros and cons of secured cards, rewards cards, student cards, and prepaid cards. Find the type of credit card that is right for you.

Business Credit Cards

Pros - A business card is an excellent way to begin building credit in a company’s name, rather than using the business owner’s personal credit.

Cons - Most credit card companies require that you have been in business at least 2 years before they will approve a business credit card. Occasionally, a credit card company will approve a card application after one year if you can provide a letter of reference from your bank about the company’s account history and finances.

Rewards Credit Cards

Pros - These cards reward your credit card spending with cash-back, airline miles, and point benefit programs. If you use your credit cards often and pay the balance in full each month, a rewards card could be a good choice.

Cons - Read the credit card offer closely. Some rewards cards have high interest rates or annual fees that cancel out the special benefits. Make sure you understand how the rewards are calculated and redeemed.

Secured Credit Cards

Pros - Opening a secured credit card is an easy and affordable way to start building your credit. Secured credit cards can also help you improve and rebuild damaged credit. These cards are used exactly like a standard credit card.

Cons - To secure the card you must put down a $200 to $250 deposit with your application.

These cards also tend to have higher interest rates (14% or higher) and additional charges such as an annual fee (usually around $50).

Student Credit Cards

Pros - Student credit cards are an excellent way to start building credit. These cards are specially designed to accept student borrowers, even if you have no previous credit experience. Having a student credit card can be helpful for unexpected expenses like medical bills or renting a car.

Cons - These cards usually have higher interest rates than standard cards. Many students end up with debt and damaged credit after using their cards unwisely.

Pre-Paid Credit Cards

Pros - These cards look like real credit cards and can be used for most situations that require a credit card. Instead of granting you a credit limit based on your financial standing, these accounts require you to “load” the card with your own money. Approval for this type of card is easy, even if you have credit problems.

Cons - These cards may not report your repayment history to the credit bureaus. If the creditor does not report your account, this type of card will not help you improve your credit. Pre-paid credit cards cannot be used in all situations. For example: hotels and car rental agencies will not allow you to use a pre-paid credit card to secure your rentals.

Now that you know the pros and cons of each type of credit card, apply for a credit card that fits your needs online today! Get started with Credit.com’s easy-to-use credit card chooser service.

Return to Top