There are three basic types of credit cards:

General-Purpose Credit Cards
These are credit cards that can be used to pay for just about anything, anywhere from clothes at department stores to meals at restaurants as well as to get cash advances. Visa®, MasterCard®, American Express® and Discover® cards are examples. Many people prefer a general-purpose card because of this flexibility.

Another advantage of using this type of card is that it allows you to track all of your purchases and/or expenses on a single bill, making payment easier. Unlike charge cards, these cards allow you to “revolve” your charges, that is, to carry over portions of your balance from month to month. If you don't pay off your charges in full from one month to the next, interest is charged on the entire outstanding balance.

Store Cards
Store cards (also known as single or limited-purpose cards) are credit cards that can be used only in a specific store or group of stores, or for a specific purpose. Department store cards like JC Penney and Macy’s are examples. So are clothing store cards like Gap and Old Navy. Be sure to read the fine print so you know what you are signing up for. The interest rate on these type of cards can sometimes be a lot higher – like around 21-25%. While many of them might have a special promotion (for example, 10% off your first purchase) when you open an account, the higher interest rate might not make it such a great deal after all.

See how store credit cards work.

Charge Cards
Traditional charge cards require you to pay for purchases or services in one lump sum within a given period of time. Usually, you don’t pay interest but you are required to pay the balance in full each month. Charge cards, such as American Express® and Diners Club, may also be called travel and entertainment cards. Late payments are subject to a fee, charge restrictions, or card cancellation depending on your card agreement.