Credit Card

A credit card is a financial tool with a pre-loaded amount that allows the cardholder to make purchases and pay for them later. The card company will allow you to pay off the balance completely and interest-free for up to 50 days from the date of payment.

To avoid fines, the cardholder can pay the minimum amount owed (usually 5% to 10% of the total amount owed). The balance, however, will be carried forward to the next month, and the credit card company's interest rate will be charged.

What is a Credit Card?

A credit card will let you pay for your purchases over time. When you use your credit card, you are effectively borrowing money from the credit card company until you pay it back at the end of the month.

Here are some attributes you should know to understand Credit Card Meaning and before getting one-

  • Those with a stable income are given credit cards by credit card firms.
  • You can simply obtain a credit card if you have a decent credit score.
  • As a credit card customer, you will be given a credit limit that is three to five times your net monthly wage. This will vary between banks.
  • Although popular banks offer credit cards, the payment gateway is provided by Visa, MasterCard, and RuPay. However, these payment facilitators are not permitted to impose additional terms and restrictions on the card. Credit card companies set the minimum due amount, interest rate, and reward points, among other things.
  • You can use your fixed deposit to obtain a credit card.

Types of Credit Cards

Here are some detailed overview about Credit Cards types available-

a) Contactless Credit Cards

  • Contactless credit cards feature a proprietary payment technology that enables cardholders to make payments by simply tapping their cards at POS terminals.

  • Customers do not need to enter a PIN number to make purchases using contactless transactions, which are extremely secure.

  • These cards provide a variety of benefits such as discounts, cash back, entertainment benefits, reward points, a welcome gift, lounge access, concierge service, insurance coverage, and so on.

b) Women's Credit Cards

  • Some banks have introduced credit cards specifically designed for women to ensure that their female customers receive the most benefits.

  • Women's credit cards are primarily concerned with shopping rewards and cashback offers.

  • Cardholders can receive bonus reward points, a waiver of fuel surcharges, insurance, and other benefits.

  • They can also earn reward points when they use their credit cards to make purchases.

c) Travel Cards

  • Travel credit cards are popular due to the numerous travel benefits they provide. These cards provide travel benefits not only in India but also abroad. Most banks have tied up with airline companies or travel companies to offer travel credit cards.

  • Customers who use travel credit card to make travel purchases can earn air miles. Aside from that, some travel cards grant customers access to airport lounges.

  • Customers can convert the reward points they earn on these cards into air miles, which can then be used to book flights and upgrade seats.

  • Travel cards also include hotel and vacation packages, golf packages, dining packages, travel insurance, and other benefits.

d) Cashback Cards

  • Customers who use cashback credit cards receive cashback on their transactions that range from 5% to up to 20%, depending on the spend category.

  • Cashback can be earned on bill payments, movie ticket purchases, retail purchases, dining bills, and grocery purchases, among other things

  •  Fuel surcharge waivers, annual fee refunds, dining and shopping privileges, global acceptance, rewards programs, balance transfers, and other benefits are available with every cashback card.

e) Co-Brand Cards

  • Banks offer co-branded credit cards in collaboration with a retail brand, travel aggregator, or any other financial institution. Both parties' benefits are integrated into a co-branded credit card, allowing customers to enjoy double benefits with a single card.

  • Co-branded credit cards that are issued in conjunction with retail merchants are the most successful because banks can easily expand their customer base through the merchant's clientele.

  • Co-branded credit cards may include benefits such as rebates, discounts, and offers from a retail partner brand, sporting benefits from a sports league, ticket booking privileges from airline and railway partners, holiday and hotel accommodation privileges from travel aggregators and premier hotel chains, and so on, depending on the tie-up.

f) Reward Cards

  • Rewards credit cards are well-known for providing multiple rewards with each card transaction.

  • Cardholders can earn rewards points on all of their card transactions, including retail, online, and so on. In addition, they can earn reward points as a welcome gift, birthday gift, renewal bonus, and so on.

  • Cardholders can earn points by spending a certain amount in a particular amount of time. These reward points can be redeemed for products/services listed in the rewards catalog, such as cashback deals, air miles, travel deals, and so on. Some credit cards allow cardholders to pay for purchases in installments.

g) Business Cards

  • Business credit cards are provided to businesses, corporations, and other financial institutions so that employers can provide credit cards to their employees while also conveniently managing their finances on the card.

  • Employees cannot use these cards for personal transactions, and they are only valid during their employment with the company.

  • Corporate cards provide benefits such as hotel and travel discounts, business savings plans, expense management, insurance, fuel surcharge waivers, airport lounge access, rewards programs, cash advances, add-on cards, bill payments, and the ability to convert purchases into monthly installments.

  • Companies can also choose to have their company name embossed on these credit cards.

h) Lifestyle Cards

  • Lifestyle credit cards are designed with the applicants' changing lifestyles and income in mind.

  • Most lifestyle credit cards include golfing, shopping, dining, travel, and other benefits. These cards typically include first-year annual fee waivers, cashback on tickets, insurance discounts, and other perks.

  • Customers who use lifestyle credit cards can earn bonus and accelerated rewards points on their purchases. The majority of these cards are Platinum credit cards that provide superior travel, shopping, dining, and luxury lifestyle benefits. 

i) Premium Cards

  • Most banks provide a "Premium" or "Signature" credit card with the best lifestyle benefits. 
  • Flexible spending limits, premium airport lounge access, concierge services, complimentary insurance, rewards program, global assistance services, chartered yacht and flight services, surcharge waivers, retail, travel, and hotel accommodation vouchers, and so on distinguish premium credit cards. There are more options for reclaiming rewards earned with these cards. 

j) Prepaid Cards

  • Prepaid credit cards allow cardholders to load money into them and use that money to make purchases.

  • Even though these cards do not provide a line of credit, customers can enjoy the majority of the benefits offered by other types of credit cards.

  • The outstanding balance is the amount that the customer leaves on the prepaid card after completing a transaction.

k) Silver Cards

  • Silver credit cards are available to anyone who earns a low salary and has 4 to 5 years of work experience.

  • Salaried employees can easily obtain this type of credit card if they have a good credit history.

  • These cards have a low membership fee and no interest on the balance transfers for the first 6 to 9 months.

l) Gold Cards

  • Individuals with a higher income can apply for a gold credit card from any Indian bank.

  • Any applicant for a gold credit card should have a good credit score.

m) Classic Cards

  • Classic credit cards include features such as global acceptance, revolving credit, cash advances, interest-free credit periods, rewards programs, supplementary cards, insurance, and a dedicated 24/7 customer care help desk.

  • Most traditional credit cards have no annual or joining fees and have low finance charges.

n) Titanium Cards

  • Titanium credit cards are high-end cards that come with a slew of perks and benefits.

  • The Titanium Rewards program, which is available to customers, is the most important feature of a Titanium credit card. This rewards program includes the accumulation of reward points, the redemption of gifts and air miles, cashback offers, and so on.

  • Surcharge waivers, revolving credit, interest-free credit period, annual fee reversals, insurance, welcome gifts in the form of vouchers from top retail brands, add-on card facility, wellness and beauty offers, lifestyle and dining benefits, and so on are all included with any Titanium credit card.

o) Platinum Cards

  • Because of the numerous benefits and privileges it provides, the platinum card is one of the most popular credit cards and is held by a large number of people.

  • The advantages include lifestyle, dining, shopping, and entertainment offers, among others.

  • Platinum cards have slightly higher annual, joining, and renewal fees than other types of credit cards.

How to Get a Credit Card?

The process for the credit card application is mentioned below-

Steps

Details

Step 1

Examine the list of credit cards provided by the lender and compare their features.

Step 2

Choose the credit card that best fits your spending habits.

Step 3

Fill out the application form with your personal and contact information.

Step 4

If necessary, upload the appropriate documentation.

Step 5

Fill out the form and submit it.

Step 6

After you submit the form, a bank official will contact you for verification and submit the application for approval.

Who is Eligible for the Credit Card Application?

Age

18 Years and Above

Nationality

Indian

Income

Subjective

Employment Status

Salaried or Self-Employed

Credit Score

700 and Above

Documents Required for the Credit Card Apply Online or Offline

  • Proof of Identification: PAN, Passport, Aadhaar, Voter ID
  • Proof of Income: Salary slip, recent salary slip, employment offer letter
  • Residential Proof: Aadhaar, Electricity bill, or Telephone bill

Credit Cards Annual Fees and Charges

The annual fees and charges applicable on the credit card are as follows-

a) Maintenance Charges

This is commonly referred to as an "annual fee. The annual fee is charged every year and once a year and varies based on the card.

Banks would sometimes give you free credit cards, which means there would be no joining or annual fees on the card for a set period of time or for the rest of your life.

b) Cash Advance Charges

As a cash limit, you are given a portion of your total credit limit. This is the maximum amount you can withdraw from an ATM using your credit card.

A cash withdrawal or cash advance is an expensive transaction that can cost up to 2.5% of the amount withdrawn.

c) Late Payment Penalties

If you are unable to pay the whole outstanding balance on your credit card, banks will let you pay the minimum amount. If you are unable to pay even this amount, the bank will charge you a late payment fee. A flat fee is assessed based on your statement balance.

d) Over-limit Charges

Based on the kind of credit card, you may or may not be permitted to exceed the spending limit. Banks do not allow this for free; instead, they charge a hefty over-limit fee for such transactions.

Most banks charge a minimum of Rs. 500, but it will also depend on the amount by which you have exceeded your limit.

e) GST

All credit card transactions will be taxed at the current rates in the country, so keep that in mind. GST is levied on annual fees, interest payments, and EMI processing fees.

Annual Fees of Credit Cards

The Annual Percentage Rate charged on the credit card has an impact on your bills, especially if you have an overdue balance. This is why it can be difficult to keep credit cards because their interest rates are the highest when compared to other types of loans. However, this is only applicable if you do not pay the entire amount owed.

Uses of Credit Cards

  • Having a credit card allows you to spend money you don't have. Credit cards will let you borrow money from a bank and make temporary purchases. All you need to do is carefully plan your finances so that you can repay the credited amount on time. Furthermore, you can borrow as much as you need (up to your credit limit) for up to 45-50 days with no interest.
  • Repaying credit card bills on time contributes to a healthy financial situation. One of the most significant credit card advantages is that proper use can actually help you build and maintain a line of credit. Banks can use this line of credit to track your card usage and credit repayments.
  • You have the option of converting your billed amount into easy, affordable EMIs and paying the billed amount over time. This will relieve you of the burden of burning a large hole in your pocket while paying your credit card bill.

Benefits of Using a Credit Card

Here are some crucial advantages of using a credit card-

  • A few credit cards allow you to withdraw money up to a certain limit in an emergency, with no interest charged for 45 to 50 days. It is useful in times of financial emergency.
  • One of the major benefits of credit cards that makes them appealing is that you get personal accident coverage as well as comprehensive travel insurance coverage.
  • When you use credit cards, you stand a chance to earn many reward points that can be redeemed in various ways.
  • Credit cards play an important role in travel. They provide a one-of-a-kind experience by providing complimentary lounge access at Indian airports and railway stations, as well as priority check-in. Aside from these, you can get food discounts at over 280 restaurants.

Relationship between Credit Card and Credit Score

Credit cards are useful for more than just shopping on credit; they also help you improve your credit score.

You can improve your CIBIL score if you know how to use a credit card, how to use the credit period, and how to repay the amount used on time. This would make it easier for you to obtain loans in the future.

Other Bank’s Credit Card Interest Rate

SBI Credit Card Interest Rate

Axis Bank Credit Card Interest Rate

Bank of Baroda Credit Card Interest Rate

HDFC Bank Credit Card Interest Rate

Canara Bank Credit Card Interest Rate

ICICI Bank Credit Card Interest Rate

IndusInd Bank Credit Card Interest Rate

IDFC FIRST Bank Credit Card Interest Rate

Kotak Mahindra Bank Credit Card Interest Rate

YES Bank Credit Card Interest Rate

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