17 Types of Credit Cards, Pros & Cons of Credit Card
Introduction to Credit cards
Credit card is a kind of payment card issued to people that enables them to make payments to the merchants for the goods and services. With the help of a credit card, the user can borrow money for payment as the card issuer creates a line of credit for the user. A credit card allows the user to continue building a balance of debt subject to the interest levied.
It is a thin rectangular piece of plastic with a magnetic strip which allows to borrow funds from a pre-approved limit for making purchases. The bank or financial institution issues the card on the basis of the credit score of the user. Higher the score, higher the limit. When the user swipes the card, the money is taken from the pre- approved limit.
There are various types of credit cards available in India for different uses and transactions. They are mentioned below in a tabular form.
Types of Credit Cards
| Sr. No. | Type of card | Description | Example |
| 1 | Fuel Card | They offer benefits on every fuel transaction made by the cardholder. It benefits the user to save on refuelling by providing cash back and fuel surcharge waivers. They also provide reward points on every fuel transaction at any petrol pump across India. The cardholder can redeem these accumulated reward points for refuelling. Annual fees for such cards is minimal so that daily commuters can avail benefits from it. | 1. BPCL SBI card 2. HDFC Bharat Cashback Card 3. Citi Bank Indian Oil Credit Card |
| 2 | Contactless Credit Card | Contactless credit cards have a unique payment technology where the user has to tap their card at the POS terminal without entering the PIN. It is very secure and safe. They offer several benefits such as cash rewards, discounts, welcome gifts, entertainment benefits, etc. | 1. SBI Signature Contactless Credit Card 2. ICICI Bank Coral Contactless Credit Card |
| 3 | Credit Cards for Women | Some banks have exclusively designed credit cards to attract their female customers which mainly focuses on cashback and shopping reward points. They come with additional and customised features suitable to the needs of females. With every purchase they can earn reward points. Some offer amazing travel benefits too. | 1, Citi bank Reward Card 2. Silk Inspire Credit Card 3. HDFC Solitaire Credit Card |
| 4 | Travel Credit Cards | Travel credit cards offer enumerable travel benefits not only in India but also abroad. Banks that offer these cards are tied up with airlines or travel companies. Customers earn air miles when they make travel transaction with this card. Apart from this they can get access to airport longue. Moreover. Travel cards provide additional offers such as hotel and holiday offers, dining offers, travel insurance, etc. | 1. Axis bank Vistara Signature Credit Card 2. Standard Chartered Emirates World Credit card 3. SBI Card ELITE |
| 5 | Cash Back Credit Cards | Cashback credit cards offer cashback to customers which varies from 5% to 20% as per their spending category. Cashback is earned on bill payments, movie tickets booking, grocery purchases, etc. The main features of the cash back card are fuel surcharge waivers, shopping and dining privileges, etc. | 1. Axis Bank ACE Credit Card 2. HSBC cashback Credit Card 3.Citibank Cash-back Credit Card |
| 6 | Co- branded Credit Cards | Banks in association with retail brands, financial institutions or travel aggregators offer Co-branded credit cards. The user get privileges from both the parties. The cards issued in tie up with retail merchants are the most popular ones. As per the different associations with varied partners, co-branded cards have various benefits and there is no restriction on usage. | 1. Simply CLICK SBI Credit Card 2. Yatra SBI Credit Card 3. IRCTC SBI Platinum Credit Card |
| 7 | Reward Credit Cards | Reward credit card offer several rewards on each transaction. They earn reward points in the form of welcome gifts, renewal bonus, etc. They can redeem these points for services and products mentioned in the reward catalogue. Some cards allow purchases even in instalments. | 1. Citi Bank Reward Credit Card 2. Standard Chartered Platinum Reward Credit Card 3. Citi Bank Reward Domestic Credit Card |
| 8 | Business Credit Cards | Business credit cards are given to the employees by the employer so they can manage their finances conveniently. They can’t be used for their personal transactions and are valid only through their employment period. They are used only for business travel, expense programs, business saving plans, etc. | 1. SBI Platinum Corporate Credit Card 2. ICICI Bank Business Advantage Black Credit Card 3. HDFC Business Money-back Credit Card |
| 9 | Lifestyle Credit Cards | Lifestyle credit cards are exclusively designed keeping in mind the changing lifestyle of the customers. These cards generally have first year annual fee waiver, along with superior travel benefits, dining and luxury lifestyle privileges. | 1. Axis bank Signature Credit Card 2. Kotak Bank PVR Platinum Credit Card 3. HDFC Regalia First Credit Card |
| 10 | Entertainment Credit Cards | These card provide excellent entertainment offers such as cashbacks, discounts, buy 1 get 1 movie tickets, etc. Customers earn reward points on every transaction and redeem these points for booking movie tickets, travel or gifts. | 1. RBL Popcorn Credit Card 2. HDFC Bank Times Platinum Credit Card 3. Axis bank MY Zone Credit Card |
| 11 | Premium/Signature Credit Cards | Premium/ signature credit cards come with exclusive lifestyle privileges such as flexible spending limits, global assistance service, chartered flight and yacht services, premium airport lounge access, etc. There are many options available for users to redeem the reward points earned on their transactions. | 1. Jet privilege HDFC Diners Club 2. Air India SBI Signature Card 3. Citi Prestige |
| 12 | Prepaid Credit Cards | With Prepaid credit cards users can load a certain amount of money which enables them to make purchases. These cards do not offer any line of credit. The balance amount left after the transactions made is the outstanding balance. | 1. Axis Bank Prepaid Card 2. HDFC Bank Prepaid Card 3. State Bank Smart Payout Card |
| 13 | Gold Credit Cards | Higher income groups can avail gold credit cards from any bank. They are required to have a good credit score. Gold credit cards have high cash withdrawal and credit limit. They have several other benefits such as add-on card facility for family members, cashbacks, travel insurance, etc. | 1. Amex Gold Charge Card 2. SBI Gold Credit Card 3. Fortune Gold Credit Card |
| 14 | Silver credit cards | Silver credit cards are made available to those who fall under the category of nominal salary range and with a work experience of 3 to 4 years. Salaried employees can easily procure this card provided they have a good credit score. Their membership fee is less and no interest is charged for beginning 6 to 9 months and no balance transfers. | 1. Union Bank Silver Credit Card 2. HDFC Bank International Silver Credit Card |
| 15 | Classic Credit cards | Classic credit cards have features like revolving credit, interest free credit period, supplementary cards, 24/7 customer service, reward program, etc. These cards have no joining fees and available at low finance charges. | 1. Union Bank VISA International Classic Credit Card 2. Indusind Bank Classic Credit Card 3. ICICI Bank British Airways Classic Credit Card |
| 16 | Titanium credit cards | Titanium credit cards have many privileges and benefits. Titanium reward program is the key feature of this card. The program includes redemption of gifts and air miles, accrual of reward points, cashbacks, etc. Moreover, there are surcharge waivers, welcome gifts in voucher form, wellness and beauty offers, insurance, reversal fees and many more. | 1. Central Bank of India Titanium Credit Card 2. HDFC Bank Titanium Times Credit Card 3. Tata Titanium Card |
| 17 | Platinum credit cards | Platinum credit cards have several privileges and thus it is a popular credit card and owned by many. Each platinum card comes with a welcome package, vouchers, accelerated reward points, cashback offers and much more. Moreover, additional advantages like entertainment, dining, shopping offers also accompanied with the card. The annual joining and renewal fees is higher compared to other credit cards. Platinum cardholder get exclusive privileges, offers and deals. | 1. SBI Advantage Platinum Card 2. Tata platinum Card 3. Indusind Bank platinum Aura Credit Card |
Pros and Cons of Credit Card
In this modern age and changing lifestyle of people, credit card has become an essential part of our lives. Due to its easy usage, privileges and cash back offers it has become more popular among the users. No other financial institution can offer such discounts, deals and offers as credit cards does to its cardholders. However, credit cards can be a debt trap if they are not used in the right manner or if you spend more than your capacity of paying its bills.
Pros of Credit Card:
- Easy Credit Access
The best advantage of a credit card is – easy access to credit. Credit card works on a concept of deferred payment. Thus, you have to make payments later on purchases made now. Your account does not get debited every time you swipe thus maintain your account balance.
- Builds a line of Credit
Credit cards enables you to build a line of credit which is very crucial for a credit history of a customer from banks point of view. The banks take into consideration the credit card bill repayment and usage to check the credit worthiness of a customer if he wants to apply for loans or future rentals.
- Facility of EMI
If a cardholder wants to make big purchase and does not want to use funds from the account, then he has the option to make a deferred payment though its credit card. Moreover, there is an add-on facility of making payment in easy monthly instalments. Making purchases through EMI is cheaper than taking a personal loan on higher interest.
- Offers and Incentives
Most credit come with several offers and incentives which includes reward points, cashbacks, discounts on flight bookings, travel offers, insurance, etc. The reward points earned on each transaction can be redeemed on air miles or used for paying outstanding card dues.
- Facility of flexible credit
Payments made by credit cards are interest free upto a time period of 45 to 60 days, during which a cardholder is supposed to pay off its outstanding bill. This enables the cardholder to acquire credit advance without paying any charges on the outstanding balance on your credit card.
- Recording expenses
Details of purchases are recorded every time you swipe your credit card and sent as a statement to the cardholder. This helps the user to keep a track of his spending and determine the budget for tax purposes. The credit card providers also sends alert messages to the user regarding the credit available and the outstanding credit still available to the user.
- Protection on purchases
Credit card lenders also make available protection to the users in the form of insurance for purchases if it might get stolen or lost. The statement of the card is used as a proof to file claim if you wish to.
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Cons of Credit Card:
- Minimum due trick
The biggest ploy of the credit card is the minimum due amount which is displayed on the statement. The user is deceived by thinking that he needs to pay that amount. But in reality it is the least amount the card holder is required to pay to continue the facility of the credit card.
This makes the customer think that he needs to pay this low amount and he continues to make purchases adding to large and unmanageable sum over time.
- Hidden charges
Credit appears to be simple and low cost at the beginning but it has number of hidden cost such as renewal fees, processing fees, joining fees, late payment fees, etc.
- Overuse of credit
Due to revolving credit, the account balance is maintained. The card holder is tempted to spend more unaware of how much he owes. This leads to spending in excess and outstanding dues.
- High interest rates
If you do not pay your bills till the due date, interest is chargeable on the amount outstanding. Interest rates on credit cards are very high which amounts to 3% per month i.e., 36% per annum.
- Risk of frauds
Because of advance technology cloning of credit card is possible and a cardholder can be a victim of fraud. The user must scrutinize the statements and check for any suspicious purchases and inform the lender immediately for stop payment or blocking the card. If the fraud is proven by the bank, you will not be charged for the purchases.
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