Different types of credit cards in India

A credit card is one of the most popular financing options in today’s era. It offers you an unsecured revolving loan that comes with a credit limit. As a credit card user, you will have to pay back your borrowed amount within a specified timeline. However, if you miss your repayment due date, you will be liable to pay high interest rate and penalties.

Today, credit cards are available in different forms - while some offer contactless transactions, others offer attractive perks and cashback. 

Let's take a look at the different types of credit cards that are available in India.

Different Types of Credit Cards & Their Perks!

In general, there are 10 types or categories of credit cards that you can choose from. But, which one would be beneficial for you? Let’s find out!

1. Rewards Credit Cards

As the name suggests, these credit cards offer reward points  for mostly every transaction. These can be ideal for everyday expenses. However, the way the rewards are distributed can vary from one credit card company to another. 

Benefits:

• You get travel rewards, payback points and cashback for almost every transaction.

• The points can be easily redeemed with most lenders offering flexible options to do so.

2. Cashback Credit Cards

Unlike rewards credit cards, cashback credit cards allow you to receive cashback or statement credits on the spent amount. Some lenders provide rewards at a set rate, while others give extra points for spending money in particular areas, like dining or vacation. Some even provide flat-rate rewards on all non-bonus purchases, in addition to bonus incentives in categories that rotate frequently.

Benefits:

• You get cashback for almost every purchase you make through such credit cards. 

• Some of them come with no annual fees.

3. Business Credit Cards

Business credit cards are meant to keep personal and business expenditures separate. These credit cards usually have high credit limits so you need to have an excellent credit score to avail them. These types of credit cards are generally used to meet emergency business expenditures.

Benefits:

• The offered credit limit is high. 

• Generally, such cards offer generous reward programs.

• Loyalty points are given for frequent usage.

4. Travel Credit Cards

Travel credit cards allow cardholders to get considerable savings on their travel reservations. These are helpful for frequent travellers no matter whether they choose to travel nationally  or internationally.

Benefits:

• You get the benefits of insuring your entire travel.

• Some cards offer low foreign transaction fees.

• You can get complimentary access to airport lounges.

• You can also get limited complimentary flight tickets.

5. Student Credit Cards

These credit cards are ideal for college students who don’t have a credit history. These cards come with lower credit limits and are ideal for those who wish to maintain a good credit score from a young age. As students generally do not have a stable source of income, they can only get a credit card as an add-on card to someone else’s credit card.

Benefits:

• These cards generally do not have any annual fees.

• These cards provide rewards and cashback for almost every transaction.

6. Co-branded Credit Cards

Co-branded cards are offered by banks and NBFCs in collaboration with renowned brands. They offer exclusive discounts and promotions when you make a purchase connected to the brand. This strategy is typically employed by banks to broaden their customer base.

Benefits:

• These cards generally provide discounts on purchases connected to the brand in collaboration. 

• They also offer excellent discounts on everyday purchases, travel, dining, entertainment, fuel recharge, etc., based on the brand that the credit card company has collaborated with.  

7. Retail Credit Cards

Retail establishments offer retail credit cards so that customers can convert their bills into multiple instalments and pay them back over time. However, certain retail credit cards can only be used at specific brands of stores. 

Benefits:

• Some of them have no annual fees.

• These cards are not exclusive to the featured brand and can be used in other retail stores as well to earn cashbacks and other discounts. You can also earn double reward points while shopping at certain stores.

• These cards offer membership perks like returning an item without a receipt, getting extended returns, free shipping, attending members only events that offer huge discounts on selected items and access to instalment or financing options.

8. Secured Credit Cards

These credit cards issue debt against collateral or cash deposits like FD, unlike traditional credit cards. Therefore, the lender will have the right to take over the collateral in case you fail to repay the credit card debt. Generally, these cards are for people with poor credit history.

Benefits:

• The credit limit is higher here as the cards are secured with collateral.

• You can get a refund on your cash deposits once you make a few regular payments.

9. Premium Credit Cards

A small number of people can apply for these credit cards. Access to golf clubs, concierge services, airport lounges, and insurance are all available without any additional charge. You must keep a very high credit score to be eligible to avail this kind of credit card in India. These cards generally have high joining and annual fees.

Benefits:

• Several high-end credit cards provide coupons for free travel and hotel stays.

• All your travels are insured.

• These cards are globally accepted and have a wide range of ATMs to withdraw cash.

10. Balance Transfer Credit Cards

Individuals generally go for balance transfer credit cards when they owe a huge sum on multiple credit cards at high-interest rates, and have no other option of repaying the dues. One can use it to transfer his/her outstanding balance to a new credit card with an APR as low as 0%.

Benefits:

• You can transfer outstanding balances from multiple cards into a single one.

• The interest rate offered on your new credit card could be much lower than your debt on your previous cards.

Takeaway

It is quite clear that different types of credit cards have their own set of perks and benefits. Most credit card issuing companies strive to cater to a broad customer base. Hence, they offer unique benefits via a range of credit card options. 

That said, it’s better to pay off your credit card bill in full and not make it a habit to pay only the minimum amount and pay higher interest on your outstanding debt..