INTRODUCTION
Previously dominated by debit cards, India is starting to see a rise in the use of credit cards as the country transitions to formal credit and the increased interest in India from international financial institutions.
Credit cards can also be used to make bank transfers and ATM withdrawals in addition to their main function of local and international purchases of goods and services. According to figures from the Reserve Bank of India, the number of credit cards issued increased to 62 million in March 2021 at a compound annual growth rate (CAGR) of 20%.
Here's a look at the different types of credit cards that are on the market, along with the essential characteristics that each one offers.
Cards with cash return
A cash back credit card offers a portion of the money spent with that credit card in cash. This is a fairly simple method of doing business. Two categories of credit cards offer cash back:
Rare credit cards that offer the same cash back on every purchase.
cards with varying payback rates across various product categories.
Lifetime No Interest Credit Cards
Users of lifetime free credit cards are often exempt from joining fees and annual fees when using the cards. With these credit cards, all purchases result in cash back or reward points. Businesses may provide their clients lifelong free credit cards as a form of self-promotion.
Cards with Co-Brands
To make it easier for customers to purchase at a particular retailer's website, many Indian banks have created credit cards in collaboration with well-known shopping portals. These websites are able to attract devoted customers while also offering substantial discounts to customers who make purchases from them.
As an illustration, banks have teamed up with oil firms to introduce credit cards that offer bonus points or payback for buying fuel from these businesses.
Cashback Credit Cards
On a minimum amount of purchases made at once, these credit cards offer reward points. Depending on how the reward points are used, there are three different types of credit cards. For instance, most businesses would award two or four points for every INR 100 spent. In India, this figure is typically in the neighbourhood of 100.
The value of reward points, where they may be exchanged for cash, varies from card to card and typically ranges from INR 1 to INR 0.25.
Users can purchase the mentioned items from the provider's or partner firms' websites by accruing reward points.
Cards for travelling
To help those who frequently or sporadically travel, certain banks have partnered with travel agencies and introduced cards. With the use of these cards, users can book vacation packages or buy tickets with reward points that can later be redeemed for further tickets or travel packages.
Card Credit for Fuel
Credit cards for fuel are the product of partnerships between banks and oil corporations. When buying fuel from any partner company petrol station, they offer fuel points or cash back. Users who want to use their reward points at the gas pumps of the partner companies cannot acquire the same amount of fuel. Only on are these facilities available.
Cards that have credit lines
The primary characteristic of these credit cards is their credit line, which entails that they will have a form of pre-approved loan that one can withdraw when needed from an ATM without providing any security or paperwork.
There are some credit cards that don't charge interest for about 50 days; if the money is paid back before that time, there is no interest charged; but, if the payment is delayed, the card will be classified as a loan. Apart from the borrowing option, these cards don't have any other noteworthy characteristics.
Final Verdict
Users must make sure they have a thorough understanding of the interest rates or other fees that will be assessed when using and purchasing with their credit cards.
The easiest method to learn more about the benefits of your credit card, the costs involved, and the rules and regulations that users must follow is to conduct a thorough online search.
protected credit cards
If you have no credit history or a bad credit history, getting a credit card may be difficult. Although they are normally provided against deposits made with the issuing bank, secured credit cards can nevertheless be useful in this situation. For those attempting to raise their credit scores, these are the best options. Furthermore, you can concurrently earn interest on your bank deposit.
These are the primary characteristics of secured credit cards:
only given out against security
lower joining costs
Equivalent to the deposit amount, the credit limit
decent incentives for your spending
credit cards with rewards
For each rupee you spend on goods and transactions that qualify, these credit cards provide rewards. For every Rs. 100 spent online, for instance, you could receive 2 reward points. The acquired reward points can subsequently be used to make purchases from a pre-existing, by the card issuer-curated catalogue. Thus, you can make money while spending it.
Common characteristics of incentive credit cards include:
Points earned for qualifying purchases
Spending above a specific threshold earns you additional bonus points.
If you spend more than a specific amount, you won't be charged an annual fee.
After earning a particular number of reward points, there is an easy redemption option.
CONCLUSION
Having more than one credit card may enable you to spread out your spending and maintain your credit line utilisation ratio per card below the advised 30%. Having numerous cards may have advantages, such as maximising earnings across all expenditure categories by combining different reward cards