Credit cards come on top of the list when it comes to convenient payment modes. With credit cards, you can make secure payments, enjoy attractive benefits like discounts and cashback, and spend more even when you are short on funds. These are some of the reasons that keep them favored despite many new alternative methods of payments getting introduced in the market.
To cater to the needs of different kinds of users, there are different types of credit cards available in the market. It can be hard to choose the best type of credit card from the plethora of options.
If you’re not sure which credit card to use or want to switch to a new card type, here is a list of various types of credit cards available in India.
Different kinds of credit cards
1. Standard credit cards
Start with standard or basic credit cards if you are new to credit cards and want to understand how they work. They are the simplest of all the different types of credit cards, making them ideal for beginners.
Using basic credit cards is straightforward. You can borrow the money up to a certain amount, use it, and pay it back at the end of the month. They do not offer any rewards or points for card usage.
2. Rewards credit cards
You get rewards from this type of credit card. Payments done using rewards cards fetch you points that you can later redeem for cash or other benefits. Most rewards come in the form of points, cashback, or travel perks such as frequent flyer miles.
Every lender defines their incentive eligibility differently, such as the minimum number of payments or minimum amount of payments made with the card.
3. Student credit cards
If you’re above 18 and still pursuing education, student credit cards are the way to go. These cards are tailored for college students and do not require a good credit history or stable income. Thus, they are easier to obtain for first-time applicants than other types of credit cards.
Unlike all other types of credit cards, financial institutions in this category do not impose an annual fee and provide additional benefits such as rewards or low-interest balance transfers.
Many lenders have their specific conditions for this category of credit cards, such as a predetermined fixed deposit account, savings account with a minimum quarterly balance, or some only giving it to students who have availed education loans. So, check the requirements with your lenders before applying.
4. Prepaid credit cards
When using this credit card, you prepay the money onto the card before using it. All purchase deductions are from the card’s balance, and the spending limit will only increase when you add an additional amount to the card. Unlike other different types of credit cards, these cards do not have financing charges or minimum payments as your deposits bear the expenses.
5. Secured credit cards
When we compare the different types of credit cards, we’ll see that they all have one thing in common. They are only available to people with a strong credit history. To obtain one, you must have a high credit score.
But what if you don’t have a high credit score and do not qualify for a student credit card and its types? In this case, secured credit cards can help. You have to provide fixed deposits as collateral, and your credit limit will be determined based on their value. Generally, it is 80-90% of the collateral. Various types of credit card providers offer secured credit cards in India.
6. Business credit cards
Businesses necessitate large-scale transactions daily. Business owners can choose from several types of business credit cards that cover purchases, sales, payments, travel expenses, and other sundry business expenditures.
Unlike all types of credit cards, this card has a greater spending limit, a spend management tool to examine your company’s spending pattern, and a customized data analysis service.
With the efficient utilization of business cards, you can easily keep your personal and business expenditure separate. Interestingly, even your business spending earns a reward with this type of credit card payment.
7. Credit cards for travel
If you are a wanderlust or travel frequently for work, you may find various types of credit cards that offer perks and benefits on travel expenses. These cards are called travel cards. With every payment from this type of card, you get travel-related rewards such as a discount on a flight, hotel booking, etc. You will also enjoy complimentary services with this type of credit card payment, such as free lounge access, air miles accumulation, and more.
They are appropriate for both personal and professional travels. Insurance, global acceptance, zero-cost currency exchanges, and other perks round out the package to make your travel experience more enriching.
Considering the credit card and its type is critical with so many different kinds of credit cards available.
Reach out to your financial institution and learn about the benefits of all types of credit cards and compare the different types of credit cards before deciding on the best type of credit card. It should fulfill your needs and be convenient for you to use.