Introduction

A credit card is a financial instrument that lets the user make purchases and pay for them later since it has a pre-loaded balance. For up to 50 days from the date of payment, the card issuer will enable you to settle the balance in whole and without incurring interest.

The cardholder can pay the minimal amount due (often 5% to 10% of the total amount owed) to avoid penalties. However, the credit card company's interest rate will be applied, and the remaining amount will be carried over to the next month.

Credit Card: what is it?

You can pay for your goods over time with a credit card. By using your credit card, you are essentially taking out a loan from the credit card company, which you must repay at the end of each month.

Before purchasing a credit card, you should be aware of the following characteristics to fully comprehend its meaning:

Credit card companies issue credit cards to those who have steady incomes.

You can easily get a credit card if your credit score is good.

Your credit limit as a credit card user will be three to five times your monthly net income. Each bank will have a different approach to this.

Although credit cards are offered by well-known banks, Visa, MasterCard, and RuPay provide the payment gateway. These payment processors, however, are not allowed to put extra conditions and limitations on the card. Among other factors, credit card firms choose the interest rate, incentive points, and minimum amount owed.

You can apply for a credit card using your fixed deposit.

Various Credit Card Types in India

There are many different types of credit cards, ranging from basic cards with modest credit limits and standard features to ultra-premium cards that are an excellent addition to a high-flying lifestyle. Regular employees, frequent travelers, students, fun-loving individuals, frugal savers, and so on all have their own cards.

The features that each credit card offers differ, so which one you choose will rely on your demands and anticipated usage. For instance, having a credit card that is co-branded with an airline will be beneficial if you travel frequently.

1. Basic Credit Cards:

For individuals who want to experiment with credit card use, this credit card will be the recommended option. Depending on your income, a limited credit limit will be assigned to you, which you can use to make purchases. No extra perks are offered while using the card to make purchases.

2. Secured Credit Cards:

By placing a deposit equal to the card's credit limit, people with bad credit can obtain a secured credit card. For banks, this deposit serves as security for issuing credit cards. The bank might return the security deposit if you pay on time for several months in a row.

3. No Annual Fee Credit Cards:

A credit card that does not charge an annual fee for use is known as a no-annual fee credit card. It can be regarded as either a basic credit or one that is only a little bit higher and offers few advantages. A credit card with no annual fee is preferred by people who are just starting to use credit cards or by those who use them sparingly.

4. Low-Interest Credit Cards:

A low-interest credit card has a lower interest rate than other cards in its identical category. This category differs from balance transfer cards, though, because the interest rate on the former is not as low as 0% and is not good for a set period.

5. Credit Cards with debt Transfers:

Although most credit cards allow debt transfers, a balance transfer credit card has a low interest rate for a predetermined amount of time. You can move the remaining amount on your current card to a balance transfer card with a low interest rate if your current card has a high interest rate. As low as 0% is the opening rate offered by certain cards.

6. Incentives Credit Cards:

These credit cards provide incentives of some form for each rupee you spend using the card. With each rewards card that it offers, each bank specifies how many reward points you receive for a certain kind of transaction, such as grocery shopping and online bill payment.

7. Cashback Credit Cards:

When you use a cashback credit card to make a purchase, you will receive a specific percentage of the total amount as cashback. Additionally, the bank can state that cashback is exclusively available for gas purchases.

8. Travel Credit Cards:

Regular travelers can make use of a travel credit card, which provides advantages like favorable exchange rates, worldwide acceptance, and travel insurance.

Credit cards that give discounts and promotions when used to cover the cost of purchases are known as shopping credit cards. Every transaction you make, whether online or off, might earn you extra benefits.

9. Entertainment Credit Cards:

These are credit cards that give deals and discounts on purchases related to entertainment. Purchases of movies, concerts, amusement parks, and other event tickets are examples of such expenditures.

10. Airmiles Credit Cards:

You will receive air mile points to your card account for each rupee you spend using an Airmiles card. You can exchange your accrued air mile points for free airline tickets or other treats from the redemption catalog.

11. Lifestyle Credit Cards:

These credit cards offer advantages when used to pay for things like fashion events, nightlife, and premiere screenings.

12. Premium Credit Cards:

Only a limited number are eligible for premium credit cards. It offers free use of golf clubs, insurance, concierge services, and airport lounges. Additionally, it can include free coupons for travel and lodging. Additionally, some cards provide a personal relationship manager to manage the cardholder's assets. Not everyone is eligible to obtain this card.

13. Co-Branded Credit Cards:

Banks and companies collaborate to offer co-branded credit cards that offer exclusive savings and offers when you make a purchase linked to the brand. Other deals are possible, but they wouldn't yield much profit. This tactic is typically employed to grow the brand's clientele.

14. Student Credit Cards:

College students are the main consumers of this type of card. The card takes into account that students frequently don't have a credit history. Compared to other full-fledged cards, there are fewer requirements to meet to be approved for a student credit card. It has a lower interest rate as well.

15. Business Credit Cards:

These are credit cards made especially for usage in businesses. This is to ensure that personal and company expenses are kept apart. To be qualified for even a business credit card, though, you must have a solid credit history. This is a result of the card issuer's belief that the applicant is responsible for paying back the debt.

16. Prepaid Cards:

Before using a prepaid card, you must put funds into it. Money is taken out of the card balance for each purchase you make. This card does not have a minimum payment requirement or financing fee.

Five clever ways to utilize a credit card

Even while credit cards have many advantages, you must use them wisely to stay out of debt.

Only use a credit card at reputable businesses, and never give out your credit card details.

Avoid using the card excessively for sporadic purchases. Spend money solely on essential and frequent purchases; avoid making unaffordable purchases.

Keep a record of everything you spend with your credit card.

Profit from cashback, credit card rewards, and other perks.

Make a repayment plan and settle your credit card debt by the due date.

Commonly Asked Questions

1. To put it simply, what is a credit card?

You can use a credit card to pay for a variety of things. It has a predetermined credit limit. The issuing organization covers your costs when you make purchases with this card. Following that, you receive a statement from the organization for the costs incurred using the card, which you have to pay back by a specified deadline.

2. What are credit cards used for?

Your credit card can be used for both online and offline purchases, as well as for any other kind of payment. You can use your credit card for the majority of other expenses, except for gaming costs, some loan EMIs, and market-related investments (stocks, mutual funds, etc.).

3. What benefits come with using a credit card?

Benefits of using a credit card include ease of use while making purchases, the opportunity to establish credit, and the possibility of earning cashback and benefits. Additionally, you can access emergency cash and purchase protection.

4. Can I take money out of my credit card?

Yes, you can use your credit card to make cash withdrawals. However, the maximum amount you can withdraw is usually limited by your card issuer. Additionally, such a withdrawal is regarded as a cash advance and is liable to interest.