5 Different Types of Credit Cards in India

Since it was first introduced to the world, the popularity of credit cards has grown exponentially. It is a financial tool that offers great convenience and caters to the diverse needs of cardholders. As the number of credit card users is increasing each day, credit card companies are offering different types of credit cards to suit the different needs of the people.

Today, when you approach any bank or credit card company to apply for a new card, they offer you different choices. You can choose a credit of a specific kind or category that perfectly aligns with your credit requirements and financial goals. Although the core function is similar, different types of credit cards have unique features and offer different benefits.

So, if you are not very financially savvy, have no experience using a credit card before, and are looking for the best credit, knowing the different kinds of credit cards available in the market can help you make an informed choice.

Types of Credit Cards Available in India

1. Secured credit cards

Sometimes, it may be challenging for you to get a new credit card, especially if you don’t have a good credit score. In such a situation, it is better to opt for a secured credit card. It is a type of card that the banks issue against the deposits you hold with the issuing bank.

Although it may have limited benefits and a small credit limit, you can use this type of card to build your credit card score and subsequently apply for another card of your choice with a wider range of benefits and a higher credit limit.

Key features of secured credit card.

Issued only against a collateral
Has low joining and annual fees
Credit limit is usually equivalent to the deposit amount
Limited benefits and rewards

2. Cashback

Amongst all types of credit cards, cashback cards are probably the most famous and most sought-after by people in India. As the name says it all, these cards are known to offer a percentage of the expenses as cashback for all eligible transactions. However, depending on the credit card you use, the cashback may be offered only on specific ‘spend’ categories.

Key features of cashback credit cards

You get guaranteed cashback on eligible transactions
You may also get additional rewards points on spending on specific categories
You may also get a good welcome benefit, encouraging you to use the card for all spends
The joining and annual fees may vary depending on the credit card issuer. Sometimes, you may also get a card with zero joining and annual fee

3. Premium Credit Cards

A premium credit card is a type of credit card that is usually offered only to people who have a high income and a strong personal credit report. Also, these cards typically have strict eligibility criteria, and if you qualify for the card, you can enjoy top-of-the-line benefits and rewards.

Key features of premium credit cards

You can enjoy concierge services at the airport, hotels, etc
You get a dedicated personal relationship manager
Most of the premium credit cards have a high annual fee
You get complementary rewards and services like access to golf clubs, airport lounges, priority check-ins, etc

4. Co-branded credit cards

Nowadays, many banks in India issue a co-branded credit card in partnership with top brands across different sectors and industries. These cards open a world of exciting and exclusive rewards and discounts when you make purchases or transact with the partner brand. Also, you do not need to have a high credit score to get these cards.

Key features of co-branded credit card

These cards are generally accepted internationally
You may get a few waivers upon spending a certain amount within a specific period
You may enjoy exclusive rewards and discounts from the partner brand
It is an ideal choice of credit card for you if you like to shop frequently

5. Rewards credit cards

This type of credit card offers reward points on all eligible transactions. For example, depending on the type of card you are using, you may get 2 reward points for every Rs. 100 you spend. You can redeem the accumulated reward points to buy various products or services from a curated catalogue or even use them to earn some discounts on your purchases or waive the annual fee.

Key features of rewards credit cards

You get reward points on eligible spends
Some banks issuing the card may also offer an additional bonus for spending above a certain threshold
You may get a waiver of the annual fees for spending over a certain limit
Redeem accumulated reward points easily
Depending on the credit card you use, the bank issuing the card may allow you to carry forward the accumulated reward points into the next financial year
You may not have a high credit score for credit cards like reward cards

Conclusion

There are many types of credit cards offered by banks in India, and the above list is not an exhaustive one. Do your due diligence, understand the type of credit card you need and apply for one accordingly. Regardless of the type of credit card you choose, making timely and full payments ensures you maximise your rewards and benefits, avoid unnecessary fees, and maintain a healthy financial profile.