What are the types of credit card and who can own it? There are different types of credit card available in India each with their own set of features and benefits. Here, the credit card issuers tends to classify their credit card offerings into different categories based on the features on offer.
Most of the credit card categories you can find include rewards cards, cashback cards, credit-building cards and low-interest and balance transfer cards, so on. Also, credit cards may be classified based on the nature of rewards such as travel cards, fuel cards, entertainment cards, shopping cards and lifestyle cards, so on.
In the cashless world, a credit card types are marketed to consumers in many ways, it’s easy to become overwhelmed by the sheer number of choices and credit card deals out there. You don’t have to learn everything about every single credit card on the market, you just need to do is figure out which type of credit card would work for your needs, which credit card type categories you belong to.
Now the work is to choose the credit card according to your needs. So, here below we have mentioned different types of credit card and their uses and how each type of card might work for your spending and financial goals.
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Types of credit card and who can own it?
- Travel Credit Card: If you are travel lover the this card is for you. This card offers travel related rewards and benefits, this is best suited for frequent travellers. That means earning flexible travel credits you can use toward any travel purchase or even points you can transfer to airline or hotel programs. Some travel credit cards also let you earn points within a specific program, such as a frequent flyer program or hotel loyalty program. You can also keep your eye out for luxury travel credit cards that offer perks like airport lounge access, discounts on travel bookings, travel insurance and annual travel credits. many of the best travel rewards cards let you earn these perks by making everyday purchases, to earn such reward points you don’t need to travel miles.
- Business Credit Card: A Business credit card a type of credit card which is basically offered to the business owners for work-related expenses and keep their personal and business expenses separate while they earn rewards on all their business spending. Such cards typically come with a high credit limit, longer interest-free credit periods, accelerated cashbacks on business-related spends, and so on.To own a business credit card you need to have to a business or income-producing activity to qualify. In general, a good business credit card helps you benefit from your everyday spending and makes running your business easier. The time of redeeming your rewards, business credit cards generally let you exchange your rewards for either cash back or airline miles.
- Fuel Credit Card: A Fuel credit cards is a card which offers cashbacks, discounts, and rewards on fuel spending. The reward points collected on the card can be directly redeemed for fuel at gas stations. Some of the best fuel credit cards are co-branded cards launched in collaborations between oil companies and banks. Such cards offer accelerated reward points on spends made on fuel only at partner gas stations. Users can not get the same amount of fuel from the partner companies petrol pump when they want to redeem the reward points. This facility is only available on the partner petrol pumps.
- Reward Points Credit Card: Reward points credit card is a type of credit card that offers reward points on every minimum spend. The minimum spend gap varies from lender to lender and can also change based on the spend category. Some even offer bonus points in popular categories like groceries, gas and dining out.The reward points collected can be redeemed against a rewards catalogue for airlines, vouchers, merchandise, and many more. By using a reward points credit card to cover your basic purchases, like groceries and household supplies, you can earn cash back and travel rewards for purchases you needed to make anyway.
- Student Credit Card: Students above the age of 18 years can apply for a Student Credit card with minimum documentation. Such card are also known as “starter credit cards” offered to college students with a limited credit history. The student cards offer perks like Interest-free periods, reward points, and discounts, they also come with a limited credit limit. Most student credit cards don’t charge an annual fee. Such cards are useful in making college students financially responsible and help them build a credit history if used responsibly.
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Cashback Credit Card: Cashback credit cards offer a certain percentage of your spends as cash back rewards, although how rewards are doled out varies from card to card. Cashbacks can be earned when you spend on bill payments, groceries, retail purchases, etc. Some cards offer a flat rate for all spends, while others offer an accelerated rate for preferential categories like travel or dining. These rewards can be availed as direct cashbacks or as statement credits. Many cashback credit cards come with no annual fee as well, although some with more generous bonus offers and rewards schemes charge annual fees on the modest side.
- Lifestyle Credit Card: A Lifestyle credit card offer reward points, cashbacks, and discounts on specific categories like shopping, movies, dining, and travel. Some lifestyle cards also offer premium benefits like golf lessons, VIP airport lounge access, concierge services, and so on. These credit cards offer tailored rewards to match your lifestyle expenditures.
- Secured Credit Card: Your fixed deposit amount acts as collateral for your credit limit. Therefore, Secured credit cards are issued against fixed deposits. Such type of cards are best-suited for first-time borrowers and those with a poor credit history. Secured credit cards are the easiest type of credit card to get approved for, so they are often helpful when you need to build credit from scratch or want to repair your credit after a financial hurdle.
- Entertainment Credit Card: An entertainment credit card is a type card basically used entertainment purpose for booking movie tickets that brings rewards, offers, and discounts on entertainment-related expenses. Common perks include complimentary monthly movie tickets, accelerated rewards on spends at partner dining outlets, and movie ticket welcome vouchers.
- Shopping Credit Card: This card is perfect for shopping lovers. A Shopping credit cards bring accelerated reward points on the online and offline purchase of apparels, groceries, electronics, gadgets, and so on. The best shopping credit cards offer an easy EMI conversion facility when product costs exceed a certain threshold.
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Dining Credit Card: If you have a big appetite for dining out, dining credit cards can make a world of difference to your wallet. This card offers a number of dining deals including discounts, offers and freebies at a wide range of partner restaurants and food outlets located all over the country and across the globe. If you’re a foodie and enjoy exploring various food destinations, you must select a credit card that offers exclusive dining privileges. Not all credit cards come with offers on dining spends, hence make sure to have a card that offers exclusive dining benefits.
These are the different types of credit card available out in the market and choosing the best credit card for yourself depends on your specific needs, your credit situation and even what stage of life you are in.
How to Choose the Right Type of Credit Card?
Here are the questions to be answered first to find out the best credit card suited for you:
- What is Your Credit score?
- What is your Goals to own a credit card?
- Do this card offer best Rewards Program?
- Is the Fees and Charges convenient ?
A thorough online research is the best way to learn more about what the choice of your credit card has to offer, the cost associated with the ask and the terms and conditions that users need to abide by.
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