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What are the three types of credit cards

what are the three types of credit cards

How to Pick a Travel Rewards Credit Card

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Travel rewards credit cards come in a wide variety. Figuring out which one is best for you can be tough, especially because they are all so different. I’ve found that the easiest way to decide on the best travel credit cards is to take a step back and group all cards into one of the three overarching categories; Co-branded cards, Travel Statement Credit cards, and Transferable Points cards.

To pick the travel credit card that’s perfect for you, you must first decide which type of card you want. Once you’ve decided on the specific category, you will have significantly narrowed your search and you can then compare the best credit cards within that category. Here are the three types of travel rewards credit cards:

Three Types of Travel Rewards Credit Cards

1. Co-branded cards:

These are cards that are affiliated with one particular airline or hotel loyalty program. These cards have been around for ages and many of them offer a good value in redemption, but their pitfall is that you can only redeem the miles/points you earn in one way — flights with that airline or stays at that hotel. Examples:

2. Travel Statement Credit cards:

These cards work very similar to cash back credit cards. The points/miles you earn usually have a value of 1 point = 1 cent and can be redeemed as statement credits to cover travel expenses. These types of cards are growing in popularity because of their simplicity and flexibility; many cardholders who are fed up with blackout dates and devaluations of airline miles and hotel points are switching to travel statement credit cards. Examples:

3. Transferable Point cards

These types of credit cards offer a blend of both the types of cards mentioned above. These cards have points that can be transferred to various airline or hotel travel partners, giving you a lot of flexibility in how you redeem and the chance to get a much better value from your points.


Which is Best for Me?

  • Co-branded Credit Cards: A co-branded credit card might be best for you if you are already a loyal customer with a particular airline or hotel. For example, if you routinely fly the same routes for business trips or to visit family, then the credit card affiliated with that particular airline could earn you lots of rewards. Furthermore, most co-branded cards come

    with various perks in addition to the ability to earn rewards. These can include things like airport lounge access, a free checked bag, or late checkout for your hotel stays. If you find the perks associated with a credit card particularly valuable, it may be a good one to apply for!

  • Travel Statement Credit Cards: If you are looking for the absolute easiest to understand travel rewards program, a travel statement credit card might be the way to go. These cards are designed for simplicity and flexibility and can take the headache out of rewards travel.
  • Transferable Points Cards: For those looking to truly glean the highest value out of their travel rewards credit card, transferable points can’t be beat. These types of cards can often offer just as much flexibility as Travel Statement Cards, but by leveraging the various transfer partners, you can also get a better value for your points with a little effort.

The Bottom Line

Understanding the difference between these three types of credit cards is crucial in deciding what your next travel rewards credit card should be. Finding the best credit cards will all depend on what you need from a credit card, and how you intend to use it. Once you’ve decided on which type of credit card you need, it’s then important to perform a credit card comparison of the best options with that category.

When it comes to travel rewards credit cards, the great thing is that there is no shortage of excellent options to choose from. The tricky part, however, is just finding the right one!

* Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.

*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.

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