The credit card industry has changed dramatically over the last decade as technology has become smarter and people started looking for more innovative financial solutions. New rewards programs, enhanced credit card security and general disruptors to the industry have led to a broad range of unique card options streaming onto the market.
Nontraditional credit cards may look flashy and exciting, but like any credit card, you need to review their fees, reward structure, features and partnerships before applying. Here's what nontraditional credit cards can look like and why you might want one.
What is a nontraditional credit card?
There's no standard definition for nontraditional credit cards, but all cards in this category have something that helps them stand out from your run-of-the-mill consumer credit cards.
Some nontraditional credit cards approve applicants based on factors outside of their credit scores (like their banking history), whereas others are co-branded with companies you might not expect. There are also unique credit building card options that don't require a security deposit like regular secured credit cards.
Nontraditional credit cards
Other nontraditional payment options
Nontraditional credit card options abound, but they're not the only payment options revolutionizing the world of credit and credit cards.
Buy Now, Pay Later
Buy Now, Pay Later plans are micro installment loans that let you buy items or services now and pay back what you owe over time. They're usually offered at the point of sale when you make an eligible purchase. Popular BNPL apps you may have heard of include Affirm, Klarna and Afterpay. Many don't charge interest or require a credit check, but they can come with late payment fees.
Pros
- Easy to get approved for
- Simple signup process
- Typically no credit score impact
- Some options are interest-free
Cons
- Make it easy to overspend
- No help building credit
- Fees can apply
- Some charge retroactive interest if you miss a payment or don't pay off the balance in time
Cash-back debit cards
There are also cash-back debit cards that let you earn rewards for spending without using a credit card. Some popular options include Discover® Cashback Debit, the SoFi Money Mastercard and the Axos Bank Cashback Debit Card.
Pros
- No risk of racking up debt
- Rewards for spending your own money
- Typically offered with no monthly fees
- Broad ATM access included
Cons
- Rewards can be limited
- No line of credit to borrow against
- No help building credit
More innovation in credit
Other innovations in the world of credit cards have changed the way we use credit over the last decade or more. These transformations have helped improve credit card safety and utility for online and in-person purchases.
- Virtual credit cards: Many credit card issuers let cardholders utilize virtual card numbers for their online transactions, including Capital One. Cardholders use a unique credit card number that increases online payment security.
- AI in credit cards: Card issuers are looking into leveraging artificial intelligence, or AI, for customer service and fraud detection, although the technology is currently being developed and not widely used.Â
- Contactless card technology: Contactless payment technology has been in use since the 1990s, but implementation saw a major boom during the COVID-19 pandemic. These days, most credit cards let you tap your card instead of swiping it or inserting it into a payment terminal if you prefer.
- Biometric payment cards: Some credit cards are also using biometric technology to increase security. For example, you may be approved to use a card after proving your identity with your fingerprint.
The bottom line
Nontraditional credit cards come in many shapes and forms, but they all seek to solve some sort of problem posed by traditional credit cards. For example, some unique card options aim to protect cardholders from paying exorbitant interest rates, whereas others use nontraditional approval processes to get their products into the hands of more consumers.
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The rise of nontraditional credit cards proves that card issuers are willing to offer products that suit nearly any type of need. As a consumer, this means you have more credit products to choose from than ever before with a strong likelihood of more on the way.
*All information about the cred.ai Unicorn Card, the M1 Owner's Card, the Aspiration Cash Back Debit Card, the Venmo Credit Card and the TD Clear Credit Card has been collected independently by CNET and has not been reviewed by the issuer.
**Out of network ATM withdrawal fees may apply. See here for details.
