Credit cards bring with them not only an opportunity to meet regular expenses efficiently but also to build a strong credit profile. Several types of credit cards are available that can satisfy various purchasing habits of borrowers. Nonetheless, individuals should be aware of all the options to select the right card for them.
As much as it is a convenient financial tool to fulfill lifestyle funding needs, it can also be challenging if not chosen correctly. Depending on various features and benefits, here are some frequent card options found in India.
Usually, a reliable credit portfolio with a high CIBIL score is one of the primary eligibility criteria to avail of a credit card. However, borrowers with a lower score can also avail of secured credit cards against fixed deposits. Here, the deposit acts as a security for financial risks undertaken by card issuers. The credit limit of these cards is fixed as a percentage of the amount available as a fixed deposit.
As the name suggests, cards that offer relatively lower interest rates than others can be counted in this category. These types of credit cards may not come with upscale benefits and features but only with a limit based on the earnings of borrowers.
Balance transfer card
Generally, most financiers provide the advantage of transferring the outstanding balance on credit cards to a new card. However, a balance transfer card is typically designed to transfer the balance from a high-interest credit card to one with a lower interest.
Moreover, depending on the lender, interest applicable can be nil as well over a specific period for convenient repayment. With this card, individuals can save a considerable amount as well.
Business owners can opt for these types of credit card for their business uses like office stationeries, maintenance, etc. Nonetheless, one needs to hole an excellent credit profile to qualify for these cards.
Mostly, reward cards offer benefits like reward points, cashbacks and discounts that borrowers can earn on payments made using the card. On specific transactions, like online payment of utility bills, grocery shopping, etc., lenders define reward points as numbers per amount of money spent. Individuals can redeem these points for benefits like discounts and save substantially on their future expenses.
Travel credit card
Frequent travellers can opt for a travel credit card as it offers incentives on hotel and flight bookings, different travel perks, etc. While travelling abroad, these cards can be beneficial for currency conversion rates, travel insurance, etc., as well. Thus, it is important to know credit card benefits for every traveller to use the most of it.
Shopping and lifestyle card
These cards are most useful for borrowers who indulge in shopping or lifestyle expenses frequently such as online shopping, dining, etc. Various benefits like vouchers, coupons, cashbacks and more can be availed on these transactions.
Typically, these cards come with lower interest rates as they are specially designed to meet several needs for students. Also, students can avail of this card without any credit history and fulfill their funding needs related to academics and otherwise across their course duration.
Airline credit cards
These cards can be provided by an airline company or by a financial institution partnered with an airline company.
Airline credit cards provide rewards when used for purchasing flight tickets. Accumulated reward points can be redeemed to get discounts on future air ticket purchases. Furthermore, these cards also provide free airport lounge access.
Fuel credit cards
Similar to airline credit cards, fuel credit cards are also provided by lending institutions in partnership with a fuel company. These provide high reward points when used for buying fuel. Cardholders can redeem these points to enjoy attractive discounts on fuel purchases. These credit cards also provide a fuel surcharge waiver.
Interest rates on credit cards
The interest rates on credit cards can vary with different lenders as well as across the varying lines of cards from the same financier. However, the rate ranges from almost 2 to 3.5% per month. As per the APR or annual percentage rate, it varies between 24-42% per year.
Borrowers with spending requirements across diverse segments can opt for all-in-one cards like the Bajaj Finserv RBL Bank SuperCard. It provides the functions of 4 cards in one and can work as a loan card, cash card, credit card, and an EMI card, fulfilling multiple expenditure needs with ease.
The concerned financial institution also brings pre-approved offers that can make the approval process simpler. Moreover, these offers are applicable to various financial products like personal loans, business loans, etc. Borrowers can take a look at their pre-approved offer by entering their contact details and name online.
So, from the above-mentioned types of credit cards, individuals can compare their preferred benefits and features to pick the most suitable card for their uses. However, they should know how to use a credit card wisely to avoid all financial pitfalls and build a reliable credit history.