Various types of credit cards in IndiaThere are so many different types of credit cards offered by banks today. Some of them come with no charges while there are many others where you have to pay an annual fee. The benefits offered for each of the cards are different. Most banks now offer joining bonuses when customers apply for credit cards. These include shopping vouchers, free goodies such as watch and bonus reward points. These might require you to pay a joining fee.

However, not everyone will be eligible for all the cards. A lot will depend on your income, credit score and other factors. Your credit card application might get rejected if you have a low credit score or if you have never applied for a credit card. In this case, you should opt for a credit card against your fixed deposit. Usually, the bank will offer a basic credit card if you go for a credit card against a fixed deposit. So, what is a basic credit card?

Basic credit card  

This is a vanilla credit card which will not offer any rewards or benefits. You can use the credit card for purchases, you can use the credit period offered and pay your bills. The credit limit for these cars might be low unless you have taken this card against a fixed deposit. The interest charged for credit might be a bit higher for these cards.

If you have a good credit score and have already got a credit card, you can opt for other types of cards. Here’s a list of cards that are popular.

Premium credit card

These are cards offered to privileged customers of the bank. Heard of the gold and platinum cards? These are premium credit cards. These cards will come with premium benefits such as free airport lounge access and discounts for dining. Usually, premium credit card comes with an annual fee. The fee could range anywhere between Rs 500 and Rs 20,000, based on the cardholder’s profile. The credit limit for these cards also tends to be high.

Rewards credit card

Most of the credit cards today are reward credit cards which offer reward points for using the credit card. For example, some cards give you up to 10 points for every Rs. 100 that you spend using the card. The number of points and the amount that needs to be spent will vary. Typically banks will allow you to use those points to buy goodies or air miles. Some banks even offer cashback for the points that you accumulate. In case of co-branded rewards cards where the bank issues the card along with a merchant, you can get more points when you purchase at that merchant’s shop or on the website.

Cashback credit card

As the name suggests, these are cards that offer cash back for the purchases that you make. The cash back can be 0.5% and 10%, depending on what you purchase. Some cashback cards give you cash back for grocery purchases while some others provide cash back for bill payments. There are also cards that provide the cardholder with cash back for purchases at certain merchants or shopping websites. The cash back is usually credited to your credit card account in the next billing cycle (the one after the credit card bill where you had to pay for those purchases). Take the Citibank Cashback credit card for instance. This card gives you 5% cash back on movie tickets, telephone bill payments and utility bill payments.

Lifestyle credit card

Lifestyle or shopping credit card is for all those shopaholics who shop every other day. Typically shopping or lifestyle credit cards provide discounts for shopping or for dining. The discounts could be 5% to 20% depending on the bank that issues the card. For example, the SBI FBB Styleup card gives you a flat 10% discount at Big Bazaar’s Fashion at Big Bazaar (FBB) stores. It also gives you reward points for spends at Big Bazaar.

Airline or Travel credit card

This is for all those travellers who like to save money. This will include travel by rail as well as air. Typically banks provide air miles every time you buy air tickets using the credit card. Some cards provide discounts for flight and hotel bookings. For instance, American Express Platinum Travel credit card provides free travel vouchers worth Rs 7,700 if you spend Rs. 1.9 lakh a year using the card. It also gives you complimentary airport lounge access and discounts for bookings.

Balance transfer credit cards

These are credit cards exclusively for those who are looking to transfer their balance to another bank. These cards come with a minimum interest-free period of 3 months to 6 months where you can pay your balance without paying any interest. Those with a huge credit card balance and are unable to pay the amount can opt for this card and pay off their balance within the interest-free period. Banks like ICICI Bank, HSBC, Axis Bank, Standard Chartered Bank, Kotak Mahindra Bank and State Bank of India offer balance transfer facility at attractive interest rates.

It is important that you check your eligibility before you apply for a credit card. This will help you avoid rejections. Every credit card rejection will lower your credit score. So, check with your bank regarding the eligibility criteria for applying for a card.

Also read:

Credit card or consumer loan to fund your big purchase?

How to use credit cards to improve credit score

Here are various ways of reversing credit card transactions

Why you need a chip and PIN-based credit card

Rolling over credit card debt: Dos and don’ts

Staff Writer

This article is written by RupeeIQ editorial staff.