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Different Types of Credit Cards in India 2021

Updated on: 14 Dec 2021 // 49 min read // Credit Cards
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There are times when one is desirous of buying something. Alternatively, situations that demand an immediate cash requirement can unwillingly crop up anytime, anywhere. On such occasions, immediate cash flows and liquidity is required. In such instances, credit cards can prove to be highly beneficial as they enable the user to 'buy now, pay later. Moreover, if prudently used, credit cards can help save finance charges. This is possible by effectively utilising the 25-50 day interest-free period that the cards offer.


What is a Credit Card?

A credit card, is a convenient, easy-to-carry, small, plastic card that offers a range of benefits that make life easier and rewarding. Issued by a bank, a credit card allows the cardholder to borrow funds up to a pre-approved credit limit, which varies with different types of credit cards. The transaction amount initiated on the credit card is to be repaid to the bank within a stipulated time.  

The cardholder also can either pay the full amount of credit availed or pay back a minimum fixed amount every month, called the minimum amount due that is calculated at 5% of the cardholder's outstanding card balance. After the payment of the Minimum Amount Due, the balance is paid from the total outstanding amount. Thus, it becomes the revolving credit attracting a rate of interest as mentioned in the terms and conditions of the issue agreement.

The credit card comes with a pre-set credit limit. It defines the maximum amount of credit that can be availed on the card. The credit limit sanctioned on different types of credit cards depends upon the credentials of the cardholder.

But with changing times, credit cards too have evolved from the basic short-term credit instrument. The credit cards now come with a flurry of benefits, reward points, cash back, and more that help the cardholder reap higher and bigger benefits on every rupee spent.


Types of Credit Cards in 2021

One may wonder how many types of credit cards are currently available in the market. To be honest, the list can be endless. Technically, the category under which the credit card is issued helps differentiate between the different types of credit cards.

If you are searching around for a new credit card, there are many options to choose from. Credit cards are typically categorised under different heads to make easy and hassle-free choices. 

Based on the applicant's requirements like lifestyle, travel, fuel, shopping needs, etc., the basic parameters vary for different credit card types.

It is noteworthy that a credit card can be categorised into different categories based on its features, credit limit and card users.


Different Types of Credit Cards Based on Features

  • Travel Credit Card - For a frequent traveller shelling out money for air ticket bookings, rail and bus booking, cab booking, hotel reservations are a norm. When made through a travel credit card, such payments not just allow 'buy now, pay later' leverage but also helps you earn reward points on every rupee spent. These reward points can be redeemed for discounts on subsequent travel bookings. Travel credit cards also offer additional benefits on frequent travel such as complimentary lounge access, co-branded privileges and more.
  • Fuel Credit Card - Fuel credit cards help you reduce your daily commuting cost by offering a fuel surcharge waiver. Also, every fuel transaction initiated on the card helps you earn accelerated reward points that can again be redeemed either for additional fuel purchase or a host of other offers, including entertainment benefits, dining, hotel, and lifestyle offers. Furthermore, fuel cards typically come with a very low joining fee and annual fee and are co-branded cards with petrol companies like HPCL, Indian Oil, etc. Thus, fuel credit card benefits can be enjoyed at partnered pumps across India.
  • Rewards Credit Card - One of the most preferred types of credit cards is the reward credit card, specifically designed for people who prefer to use credit cards for any kind of purchase. These credit cards help you earn high rewards on all expenses with accelerated points on specific categories. One can redeem reward points for items in the rewards catalogue, brand vouchers, air miles, hotel, food, etc.
  • Cash Back Credit Cards - The cashback credit card allows you to redeem reward points earned on all expenses against cash, enhancing your value for money. The cashback, so earned, is credited in the billing statement and can be used to pay the outstanding bill on the credit card.
  • Co-branded Shopping Credit Cards - Co-branded shopping cards are usually issued by the banks in partnership with retail giants who allow the cardholder to enjoy exclusive discounts at the outlet. If you are a loyal customer of companies like Amazon, Lifestyle and more, be ready to earn additional discounts, sale preview offers, cashback offers and more with your co-branded shopping credit cards. These cards usually come with an 'annual fee waiver' clause, which allows the cardholder to get the fee waiver on reaching the minimum spend in a card year.
  • Secured Credit Card - Secured credit cards are lifetime free credit cards, i.e. the card is a free annual fee credit card. Secured credit cards are issued against a fixed deposit. Fixed deposit must be in the same bank where you apply for a credit card. The principal amount of the fixed deposit remains intact, and one continues to earn the interest on the fixed deposit. The credit card allows you to avail credit on the card, which can be paid in instalments in the next billing cycle.
  • Lifestyle Credit Card - A lifestyle credit card is typically designed keeping in view the lifestyle needs and requirements of the cardholder. From shopping discounts, reward points, cash back on retail spends to exclusive offers and complimentary benefits at airport lounges, golf courses, hotels, restaurants and more, a lifestyle card allows you to live your dream.
  • Prepaid Credit Card - Unlike a debit card, a prepaid credit card is not linked to your bank account. It allows you to use the money to the extent it has been loaded into the credit card account. A prepaid credit card is also different from a conventional credit card. In a prepaid credit card, you use your own money, whereas the cardholder borrows money from the issuer in a normal credit card. As a result, prepaid credit cards significantly contribute towards boosting the credit score of the cardholder.
  • Business Credit Card - Business credit cards are intended to be used by a business. Therefore, they are issued to business entities and not individual persons. The credit limit set on the card is based on the financial standing of the company. These cards are typically designed to offer unmatched rewards and benefits on business expenses. These cards help make the company's profile creditworthy.


 

Different Types of Credit Cards Based on Credit Limit

The credit limit on the credit card is the extent to which the cardholder can spend on the credit card. Based on the credit limit fixed by the bank, the credit card can be divided into the following categories.

  • Basic Credit Card – These are entry-level cards with no bells and whistles. While these types of credit cards provide the cardholder with the basic credit facility, they fall short of providing additional features and offers. For example, they offer the lowest credit limit.
  • Silver Credit Card – The cardholder graduates from a basic credit card to a silver credit card. These cards offer slightly higher credit limits as compared to basic credit cards. These cards are perfect for people who have a nominal salary and work experience of about 4-5 years.
  • Gold Credit Card - Existing cardholders with a good credit score and payment history can apply for a gold credit card. With a higher credit limit and a higher cash withdrawal limit, cashback offers travel benefits; a gold credit card offers a world of benefits.
  • Platinum Credit Card - The most prestigious in the league of credit cards is the platinum credit card. The card offers the highest credit limit and a range of privileges. Though the annual fee and joining fee of a platinum credit card are higher than other types of credit cards, these credit cards come with a spend-based fee waiver clause.


 

Different Types of Credit Cards Based on Users

Student Credit Cards – These cards are issued to college students. There is a low credit limit on these cards and charges a low rate of interest. However, they do not offer any additional benefits or rewards.

  • New Users Credit Card – New user credit card or basic credit card are introductory credit cards for a new customer. They are issued to persons with a regular and fixed monthly income. Such credit cards have a low credit limit.
  • Add-on Credit Cards – The add-on credit cards are issued to people who do not have a direct financial standing. These cards are issued to relatives of people holding the main credit card. Thus, the credit limit, finance charges, benefits and terms and conditions applicable on the main credit card are applicable on the add-on card.
  • Women Credit Card – To ensure that women enjoy their financial freedom, some banks issue credit cards specifically designed for women customers. These credit cards carry a credit limit that depends on the applicant's financial standing. In addition, such cards offer lifestyle features, reward points, discounts and more. The finance charges applicable on women credit cards are slightly lower than the normal variants.


 

How to Choose the Best Credit Card as per Your Needs?

Whether you are looking for your first credit card or are simply exploring to find a credit card that can meet your ever-changing needs and requirements, the search between scores of different types of credit cards available in the market can be quite a task. But breaking down your key requirements to point-blank factors can make this task relatively easier. The factors that affect our choice of credit card are:

  • Collaborating Partner -The journey begins with choosing the perfect credit card as a networking partner. While credit card issuers back the credit cards financially, the credit card networking partner acts as the technical backbone that brings the card issuer and the merchant together. In India, Visa, Mastercard, Discover, American Express and RuPay are the major collaborating partners. In addition, different banks have tie-ups with different payment systems. In addition to the rewards and benefits offered by the bank, these credit card networking partners also offer a range of benefits. So, choose for collaboration that offers the best rewards as per your needs.
  • Spending Pattern – To zero in on a perfect credit card, it is important to assess and evaluate your spending pattern. This will help you choose between credit card categories like travel, fuel, dining, entertainment, shopping, lifestyle, etc. If your spending pattern matches with the card category, the rewards and benefits increase manifold.
  • Interest in Reward Points – A reward point adds worth to every rupee spent on the card. So a rewards credit card that allows you to earn accelerated reward points on your everyday spending eventually turn out to be most rewarding.
  • Fees and finance charges – The fee and finance charges charged on a credit card is why a credit card issuer is in business. If you are a first-time credit card user, opt for a card that comes with a low joining fee, annual fee and finance charges. However, a credit card is a double-edged sword. If not used prudently, it can lead you to an eternal debt trap.
  • Fee waivers – Some credit cards offer to spend based fee waivers. Cardholders who pay off their card dues each month on or before the due date can reap the maximum benefits of a credit card. On top of that, enjoying annual fee waivers can make your credit card an free credit instrument.
  • Co-branded cards - All benefits of a co-branded credit card are invariably linked to the partnered brand. Thus, one should opt for a co-branded credit card only if the cardholder has a high level of engagement with the partnered brand.


 

How to Apply for a Credit Card Online in India?

Unlike the task of choosing the best credit card from among the different types of credit cards available in the market, which is demanding and challenging, the job of applying for a credit card online in India is simple and easy.


 

To apply for a credit card online in India, simply follow these simple steps:

Step 1: Compare and contrast the credit card offers

Step 2: Check your eligibility status for the selected credit card

Step 3: Go through the terms and conditions of the lending institution pertaining to the shortlisted credit card.

Step 4: Fill in the required details of your income and personal details. Apply for the credit card online. An application tracking ID will be issued once the application is submitted. This can be used to track the application subsequently. A representative from the lending institution will get in touch with the applicant to further process the credit card application.

Frequently Asked Questions

✅ What is a secured credit card?

When we say, secured, it means the credit card is issued against a fixed deposit account running in your name in the same bank where you wish to apply for a credit card. The cardholder continues to earn the decided rate of interest on the fixed deposit. On the other hand, the credit card attracts finance charges and other charges. A secured credit card is typically a lifetime free credit card.

✅ What are cashback credit cards?

Cashback credit cards are credit cards that offer cashback as a reward. Under this credit card category, the reward points earned and amassed on the credit card during the year can be redeemed for cash credit in the card statement. This can be used to pay off outstanding card dues.

✅ Do all credit cards have a joining fee and annual fee?

Credit cards usually charge a joining and annual fee. But these charges can be waived off in cards that come with a minimum spending linked clause. However, lifetime free credit cards have no joining fee or annual fee. They are issued against a security deposit with the bank, typically a fixed deposit.

✅ What do credit cards for women offer?

More and more women are now working and are financially independent. Lending institutions acknowledge this change and have specifically designed credit cards, especially for their women customers. These credit cards come with a lower joining fee and annual charges. On the other hand, they are high on rewards, discounts, and lifestyle offers, a feature that typically attracts every woman. The credit limit on the card depends on the female applicant's income stature and credit score.

✅ Which are the credit card networking partners in India?

Visa, Mastercard, Discover, American Express and RuPay are the five major credit card networking partners in India.