All About The Different Types Of Credit Cards In The Market

When it comes to credit cards, the best way to get the most out of them is to choose one that fits your lifestyle and spending habits. Choosing one credit card from so many available possibilities, on the other hand, may be tough. To make things easier for you, we've compiled a list of the top 10 credit cards in India given by various card issuers, as well as the best credit cards in several categories such as shopping, travel, gasoline, rewards, cashback, and cards with premium features. 

 

Leading credit card issuers in India, such as HDFC Bank, SBI Card, Axis Bank, and IndusInd Bank, provide a variety of cards, each catering to specific individual needs such as fuel, online shopping, eating, movies, groceries, or a combination of all of the above. You must first analyze available possibilities before applying for a card. To get started, here is a list of the finest credit cards in India, along with their annual fees and top attributes.

 

What exactly is a Credit Card?

 

A credit card is a small rectangular piece of plastic or metal provided by a bank or financial services business that enables cardholders to borrow funds to pay for products and services at merchants who accept cards. Credit cards require cardholders to repay the borrowed funds, plus any applicable interest, as well as any additional agreed-upon charges, in full by the billing date or over time.

 

A credit card is a payment card issued by a financial institution, such as a bank or an NBFC, that allows the cardholder to borrow funds for purchases or cash advances. The credit limit, which is decided by the card issuer based on the cardholder's creditworthiness and other variables, determines the maximum amount that the cardholder can spend with the credit card.

 

A credit card offers a variety of features and perks, including discounts, reward programs, cashback offers, lounge access, fraud protection, and many others. It is a convenient approach to manage cash flow and develop credit history that can be utilized for online shopping, travel, and everyday spending.

 

In addition to the usual credit line, the credit card issuer may provide cardholders a second cash line of credit (LOC), allowing them to borrow money in the form of cash advances that can be accessed through bank tellers, ATMs, or credit card convenience checks. When compared to transactions that access the primary credit line, these cash advances often have different terms, such as no grace period and higher interest rates. Traditionally, lenders established borrowing restrictions based on an individual's credit score. 

 

Also Read | How to Choose the Best/Right Credit Card?

 

Types of Credit Cards

 

Different sorts of credit cards meet the demands of different cardholders. The appropriate card will help you reach your financial objectives responsibly while also giving the most value.

 

Many credit cards are designed for a specific purpose, such as earning rewards, developing credit, financing significant purchases, assisting businesses in financing expenses while earning rewards, or paying existing credit card debt through incentivized balance transfer offers. Check out our guide to the many sorts of credit cards below to discover more about which one is best for you.

 

1. Reward Programs Cards: 

 

Cardholders who use a rewards credit card to make purchases can get cash back, points, or miles. Welcome bonuses allow new cardholders to earn a reward for spending a certain amount on a card within a certain time frame. Rewards cards can be especially beneficial for people who use credit cards frequently or for large purchases. Travel cards offer those that travel often (or use specific airlines or hotels frequently) additional miles and points that can be applied towards free tickets or rooms, upgrades and status changes, and lounge access and certain travel protections.

 

2. Fuel Credit Cards:

 

Fuel credit cards provide advantages on every fuel transaction made by cardholders. Customers can save money on refueling with this card because it pays rewards and waives fuel surcharges. Some banks additionally provide accelerated rewards points on fuel purchases made at specified petrol outlets around India. The earned reward points can be redeemed for a predetermined amount of refueling. Other incentives include an activation bonus, entertainment benefits, food, hotel, and fitness offers, and so on.

 

Auto credit cards have very cheap annual and joining fees, and daily Metro/train passengers can considerably profit from using these cards. These cards function as both a travel card and a regular credit card that may be used for shopping and other expenditures. These cards come preloaded with a particular amount of cash as a welcome bonus, and they also have an auto top-up feature. Customers can earn points for top-ups and other purchases. Cardholders can also get annual renewal deals, add-on cards, and fee waivers with some cards.

 

3. Contactless Credit Cards:

 

Contactless credit cards use a proprietary payment mechanism that enables cardholders to make payments by just tapping their cards at POS terminals. Customers do not need to input a PIN number to make purchases using contactless transactions, which are incredibly safe. These cards provide a variety of benefits such as discounts, cash back, entertainment benefits, reward points, a welcome gift, lounge access, concierge service, insurance coverage, and so on.

 

4. Premium Gift Cards:

 

Premium rewards cards often have high yearly fees in exchange for increased earning potential and additional advantages. These cards are ideal for folks who understand how to properly manage credit cards. Premium rewards cards often demand great credit for application approval.

 

Due to  premium rewards cards can have high interest rates, they are excellent for customers who pay their balances in full each month. If you frequently carry a card balance, the fees and interest you will pay may be greater than the value of any rewards you may receive.

 

5. Balance Transfer Cards:

 

Balance transfer offers allow cardholders to fund current credit card debt, generally at low or no interest for a limited time. After the promotional period, the APR is standard or regular. These "intro APR periods" can be anything from six to twenty months or more. Balance transfer credit cards may also include incentives or other perks. If you are seeking to manage existing credit card debt, a balance transfer card may be a financially favorable alternative even after the balance transfer is done.

 

6. Travel Credit Cards:

 

Travel credit cards are popular due to the numerous travel incentives they provide. These cards provide travel perks not only in India, but also internationally. Most banks have partnered with airlines or travel agencies to offer travel credit cards. Customers who use this card to make travel purchases can earn air miles. Aside from that, certain travel cards grant clients access to airport lounges. Customers can convert the reward points they earn on these cards into air miles, which can then be used to book flights and upgrade seats. Travel cards also include hotel and vacation packages, golf packages, food packages, travel insurance, and other benefits.

 

7. Corporate Credit Cards:

 

Business credit cards are provided to businesses, corporations, and other financial institutions so that employers can provide credit cards to their employees while also simply managing their finances on the card. Employees cannot use these cards for personal purchases, and they are only valid during their work with the company. 

 

Corporate cards provide benefits such as hotel and travel discounts, business savings plans, expense management, insurance, fuel surcharge waivers, airport lounge access, rewards programs, cash advances, add-on cards, bill payments, and the ability to convert purchases into monthly installments. Companies can also choose to have their corporate name imprinted on these credit cards.

 

Also Read | 10 Best Credit Cards in India

 

How do Credit Cards Work? 

 

To make a purchase at a physical store, you normally slide your credit card into a card reader, which reads the security chip on the card. You may be required to provide your billing ZIP code as well. When you shop online, you'll be asked to input your credit card number, expiration date, and security code (which is usually found on the back of the card), as well as your name and billing address.

 

When you use your credit card to make a transaction, the merchant's credit card terminal contacts your credit card issuer to determine whether the card is valid and has sufficient available credit. Your credit card company will then notify you if the transaction was allowed or rejected. If it is authorized, you are ready to leave. If not, you may have exceeded your credit card limit or had your card canceled due to suspected fraudulent activity. This does not necessarily imply that your identity has been stolen; card companies may disable your card and contact you if you make strange purchases.

 

Credit cards have a higher annual percentage rate (APR) than other types of consumer lending. Interest charges on any unpaid balances charged to the card are typically imposed approximately one month after a purchase is made (unless there is a 0% APR introductory offer in place for an initial period of time after account opening), unless previous unpaid balances were carried forward from a previous month—in which case no grace period is granted for new charges.

 

The credit card company provides you a specified period of time to repay the whole amount borrowed before you are charged interest. The grace period, which is normally roughly 21 days, is the time before interest is levied. If you do not pay off your entire balance before the grace period expires, a fee or finance charge is charged to your balance. The finance charge is determined by your interest rate and the amount owed.

 

Bottom Line

 

There are numerous sorts and classes of credit cards. Some cards award miles, points, or cashback and provide other benefits, but others can help you finance debt from another credit card with a reduced APR. Other cards assist people in building credit, while others are used to finance significant expenditures. Business credit cards are used by small enterprises and organizations to receive incentives and pay expenses. Some cards may achieve numerous objectives.

 

Based on who you are and why you need a credit card, select a card with the advantages that best suit your needs. It's also absolutely fine not to own or use a credit card. If you do want a card, make sure to educate yourself on different card offerings and fully grasp the restrictions before applying so you can use the card responsibly if you qualify.