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Understanding the Various Types of Credit Cards

Learn about the different kinds of credit cards available and which may be right for you

Credit and charge cards come in a variety of categories to fit almost all purchasing needs. There are consumer cards, business cards and corporate travel cards. Each type of card offers a different combination of financial controls, features, options and perks. What they have in common is convenience and flexibility to buy now and pay later, either in full each month or over several months. Though there are different kinds of cards available, each comes with a cardholder's agreement and corresponding responsibility to pay back what you spend. Examine your spending habits, credit score, desired benefits and the structures of the various types of cards to determine which might be right for you.

Different Types of Credit Cards

Charge Cards

Charge cards are a type of credit card that require you to pay the full amount you've charged each month. There are no periodic finance charges, and charge cards often come with the ability to earn rewards based on spending behaviors.

Credit Cards

Credit cards offer a revolving line of credit, meaning consumers may carry a balance from month to month rather than having to pay the balance in full every month. Each time you use a credit card, you are essentially taking out a loan, and card issuers require a payment of at least the minimum amount due be paid by the due date every month. Interest charges typically accrue on amounts charged.
 
Learn more about American Express fees and interest charges

Rewards Cards

Rewards cards come in the form of credit and charge cards and offer consumers extra value for purchases. Rewards include cash rebates, merchandise, airline tickets, hotel stays, and gasoline and gift cards. There are several different types of rewards cards, and they are defined by how the rewards are earned and redeemed:

 

  • General rewards cards usually earn one or more points for every dollar of purchases. The points may be redeemable for gift cards, electronics, travel, cash and more.
  • Cash-back cards allow consumers to earn cash rewards for making purchases. The cash reward, typically a percentage of purchases, may be applied to a balance (if there is one) or to future purchases with select retailers. Alternatively, the cash reward may be sent to the cardholder in check form.
  • Airline mile/frequent-flier cards allow consumers to earn loyalty program points for dollars charged. Points can be redeemed for rewards such as airline tickets and airline upgrades, hotel rooms and car rentals.
  • Hotel or travel cards allow consumers to earn points toward free nights and/or room upgrades at a particular hotel chain, and sometimes toward airline tickets and rental cars, too.
  • Retail or category rewards cards earn points for products or services bought from a specific retailer, such as a department store, gas station, home improvement store or bookstore, or a category of retail spending such as gasoline or grocery. Some retail rewards cards also offer discounts and invitations to special events.

 

Refer to your cardholder agreements for information on rewards programs for the types of credit cards you carry.

Prepaid Cards & Gift Cards

A prepaid card is exactly what it sounds like; a payment card that is pre-loaded with value that can be used at a later time. There are two different kinds of prepaid credit cards available – reloadable, multi-use cards and single-use gift cards. These types of cards can generally be used where American Express cards are accepted depending on the features and functionalities associated with the particular prepaid card.  A general purpose reloadable prepaid card is usually personalized with the user’s name, and the name of the cardholder (who may differ from the user). This is great for parents of college students who can obtain a prepared card for their child and control the amount of funds on the card and when it is reloaded.

 

Prepaid cards can be reloaded via a bank account, cash, direct deposit, online and more depending on the provider’s options. Some general-purpose, reloadable prepaid cards can be used abroad, to access cash via an ATM, and to make purchases online. (Single-load gift cards cannot be reloaded, used internationally or used to get cash from an ATM.)

 

No credit check or history is needed to obtain a single-use gift card or a general purpose reloadable prepaid card. However, like most financial products, you will still be required to provide details verifying your identity and address in order to obtain a prepaid card.

Business Cards

Companies have the opportunity to enjoy the same credit and charge card benefits available to consumers in addition to features and advantages specific to business needs. Business owners can use their cards for office supply expenses, services (temporary labor, consultants) and corporate travel. This type of card also offers a convenient alternative to the invoice-and-paper-check payment method and can help track expenses, simplify bill payment and reduce reliance on petty cash.

 

Choose from the same types of cards above: credit or charge, rewards or not, basic or premium, and then review benefits unique to the needs of business owners. Business card users can determine billing arrangements (individual or central billing, for example) and can set spending controls, which limit card use to designated types of merchants or types of charges (such as airfare only).

 

In addition to the cards that large corporations have used for many years, there are also different kinds of credit cards with more targeted uses, including purchasing cards, corporate meeting cards and cards for small businesses.

 

Many business cards also offer a variety of benefits, such as discounts on certain products and services, or with certain vendors; enhanced insurance, emergency travel and medical assistance lines and travel agent services.

 

Compare the different types of cards at American Express to find what’s right for you.