A credit card is a card that allows people to buy items without cash. Each card has a unique number. The client can buy goods or services using this number, plus other details on the card (such as the validity date or a code). The issuer of the card automatically transfers the money to the seller. The person using the card gets the credit. The customer has a certain amount of time to pay the credit card bill. If the bill is left unpaid for some time, the customer will have to pay interest for the amount that is left unpaid. A credit card payment is one of the most common electronic payment methods.
Credit cards are usually small plastic cards with a unique number attached to an account. Most are magnetic stripe cards, and many have an EMV chip for use by card readers.
Paying with a credit card means you borrow the money and must pay it back in a specified time. Users who fail to pay in time may have to pay much more.
India is picking pace in its credit cards percolation owing to the move to formal credit, thanks to world financial companies’ growing interest in investing in India.
Besides their primary purpose of purchase of goods and services domestically and internationally, credit cards also allow users to withdraw money from an ATM and make bank transfers. The Reserve Bank of India data shows credit card issuance has grown at a compound annual growth rate (CAGR) of 20% to 62 millionin March 2021.
Here’s a look into what kind of credit cards are available in the market and the basic features that are on offer.
Cashback Credit Cards
A cash back credit card provides a percentage of the amount spent with the help of that credit card as cash. This is a very straightforward way of conducting business. There are two types of cashback credit cards:
• Cards that provide the same cash back on any purchase, which is uncommon.
• Cards that provide different cashbacks on different product lines.
Life Time Free Credit Cards
To use a lifetime free credit card, users do not have to pay an annual fee and the joining fee is not charged at most instances. One gets cash back or reward points on all spends done through these credit cards. Sometimes companies, in order to promote themselves, also offer lifetime free credit cards to their customers.
Co-Branded Credit Cards
Many Indian banks have partnered with popular shopping sites and launched credit cards to facilitate shopping from a particular shopping website. Customers can get good discounts on purchasing from these websites and at the same time these websites are able to get loyal customers.
For instance, banks have partnered with oil companies and launched credit cards that offer reward points or cashback on purchase of fuel from these companies.
Reward Points Credit Cards
These credit cards provide reward points on spending a minimum sum of money at a go. These credit cards are of three kinds depending on the redemption of these reward points. For example most of the companies would give two or four reward points on spending every INR 100. This amount in India is mostly close to hundred.
• Where reward points can be converted to cash, the value of these reward points would differ from card to card, ranging from INR 1 to INR 0.25 in most of the cases.
• Where users can accumulate reward points and purchase listed articles from the website of the provider or partner companies.
Travel Credit Cards
Some banks have collaborated with travel companies and launched cards to facilitate people who would like to go for vacations or frequently travel. These cards provide reward points in purchasing tickets or booking travelling packages to users and the reward points earned can again be used to pay for some other travelling package or airline tickets.
Fuel Credit Cards
Fuel credit cards are a result of the collaborations between oil companies and banks. They provide fuel points or cash back on the purchase of fuel from any petrol pump of the partner companies. Users can not get the same amount of fuel from the partner companies’ petrol pump when they want to redeem the reward points. This facility is only available on the partner petrol pumps.
Premium Credit Cards
Premium credit cards are expensive credit cards concentrating on the comfort of users. They have features like golf course visits, unlimited airport lounges, dining discounts, health care facilities, discounts in flight bookings, etc. these credit cards can be ten times or even more expensive than normal credit cards.
They can be a real game changer in terms of luxuries and comfort. There is not much concentration on reward points but even then there is the facility of reward points but the main area of concentration is luxuries.
Credit Cards with Credit Lines
The main feature of these credit cards is their credit line, which means that these credit cards will have a sort of pre-approved loan which one can take at the time of need from an ATM without any security or paperwork.
There are cards which do not charge any interest for 50 days or so and if one repays the money before that then there will be no interest on borrowed sum, but if someone delays it then it will be treated like a loan. There are not any other significant features in such cards other than the facility to borrow.
Users must ensure they have a holistic understanding of the interest rates or other charges applicable on their credit cards’ purchase and use.
Thorough online research is the best way to learn more about what the choice of your credit card has to offer, the cost associated with the ask and the terms and conditions that users need to abide by.