10 Different Types of Credit Card in India

The credit card market offers a wide variety of options, which can be overwhelming. To choose the right card, begin by assessing your needs and how you plan to use your credit card. By understanding your requirements and usage scenarios, you can make a more informed decision. In this blog, we’ll explore the different types of credit card to help you find the one that best suits your needs. Let’s dive in.

Different Types of Credit Card

1. 01

   Travel Credit Cards

   Travel credit cards let you earn rewards for travel expenses like airline tickets and hotel stays. They often come with additional perks, such as travel insurance, priority services, and access to airport lounges.

   Travel credit cards can be significantly different from each other. Some allow you to transfer rewards to various airline or hotel programs, while others are limited to one specific brand. Some cards also offer extra bonuses for spending in other areas like entertainment or dining. Many travel credit cards provide a bonus or a welcome benefit for opening a new account, though most charge an annual fee.

   Comparing the value of rewards from different travel credit cards can be challenging, as the worth of points can differ between airlines and hotels.

2. 02

   Rewards Credit Cards

   Rewards credit cards give you points for every purchase you make. You earn a set percentage of your purchase amount as reward points. For example, you might earn five points for every Rs. 100 spent. The points earned can differ based on the type of purchase; for instance, buying fashion accessories or shopping from clothing brands might earn you different points compared to buying groceries or dining at a premium hotel. Once you collect a certain number of points, you can browse the catalogue provided by your card issuer and choose how you want to redeem your rewards.

3. 03

   Fuel Credit Cards

   Fuel credit cards are designed for frequent drivers, offering benefits specifically for fuel purchases. They are ideal for those who spend a significant part of their income on petrol or diesel. The main benefits include surcharge waivers, eliminating extra fees on card payments at petrol pumps. Many fuel credit cards also reward loyal customers with free fuel or other incentives upon reaching certain spending milestones. Additional perks often include accelerated reward points on fuel purchases, cashback offers, and discounts at partner outlets. These features make fuel credit cards a valuable tool for managing fuel expenses and maximising savings.

4. 04

   Cashback Credit Cards

   Unlike reward points cards that require you to accumulate points and then redeem them for rewards or merchandise, cashback credit cards offer a more straightforward approach. These cards give you a fixed percentage of your spending back as instant cash credit into your account. This means you don’t have to worry about complicated point redemption systems or hidden terms and conditions.

   To maximise your savings, many cashback credit cards offer tiered rewards based on spending categories. This allows you to maximise your savings on the things you spend the most on. One standout cashback card in the market is the Jupiter Edge CSB Bank Credit Card. This card offers a generous 2% cashback on essential categories like travel, dining, and more, ensuring you get more value for your money. Additionally, you earn 0.4% cashback on all other spends, making it a rewarding card for everyday use.

5. 05

   Prepaid Credit Cards

   Prepaid credit cards offer a convenient and secure alternative to traditional credit cards. Unlike traditional credit cards that operate on a line of credit, prepaid cards function similarly to debit cards, requiring users to load money onto the card before making purchases. This eliminates the risk of accruing debt, making them a popular choice for individuals looking to manage their spending.

   Similar to traditional credit cards, prepaid cards can be used for both online and offline purchases. They offer the same convenience of contactless payments, online shopping, and even the ability to avail discounts and offers. Many retailers and online platforms accept prepaid cards, making them a versatile payment option for various transactions.

6. 06

   Corporate Credit Cards

   Corporate credit cards help keep personal and business expenses separate. They are ideal for handling business-related costs such as flights, accommodation, and transportation. Corporate credit cards often offer higher reward rates than personal credit cards, with rewards typically available as air miles or cashback.

7. 07

   Student Credit Cards

   Student credit cards are specifically designed for young adults who are building their credit history. These cards often come with lower credit limits to help students manage their spending and avoid overwhelming debt. Many issuers offer rewards programs tailored to students, such as cash back on purchases at popular stores or discounts on student essentials like textbooks and electronics.

   It’s crucial for students to use their credit cards responsibly. This includes making payments on time, keeping balances low, and understanding the terms and conditions of the card. Building a strong credit history early on can have long-term benefits, such as qualifying for lower interest rates on loans like real estate and auto loans.

8. 08

   Secured Credit Cards

   Secured credit cards require a refundable security deposit, which usually sets the card’s credit limit. They are easier to get approved for than most unsecured credit cards because you are pre-funding your credit line. This makes them a good option for individuals with poor credit.

   It’s crucial for students to use their credit cards responsibly. This includes making payments on time, keeping balances low, and understanding the terms and conditions of the card. Building a strong credit history early on can have long-term benefits, such as qualifying for lower interest rates on loans like real estate and auto loans.

   Secured cards are often less expensive than unsecured cards with most of them requiring a minimal joining fee which can be waived once you hit the spend milestone. Additionally, most secured card issuers report your balance and payment history to the three major credit bureaus: Experian, Equifax, and TransUnion. Responsible use and timely payments can help improve your credit score.

   Aside from the security deposit and credit limit, secured credit cards function like any other credit card. The card looks the same, so using it for payments won’t reveal that it’s a secured card. The security deposit only covers defaults, so you still need to make your regular payments.

   As your credit improves, you may have the option to switch from a secured card to an unsecured card without closing your original account. When that happens, you can close your secured card account and get your deposit back.

9. 09

   Co-branded Credit Cards

   Co-branded credit cards are a strategic partnership between a financial institution and another company, often a retailer or airline. These cards feature the logos of both partners and offer unique rewards and benefits tied to the partner brand. For instance, an airline co-branded card might offer frequent flyer miles, lounge access, or priority boarding. Similarly, a retail co-branded card could provide discounts, cashback, or exclusive access to sales. While they often come with annual fees, the perks can make them a valuable option for loyal customers of the partner brand.

10. 10

    Premium Credit Cards

    Premium credit cards provide exceptional benefits, including attractive discounts on dining, spas, and more. These cards often require a high-income level and, in some cases, are available by invitation only. They also come with higher annual fees and generally require significant spending to waive these fees.

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Closing Thoughts

There isn’t a single “best” credit card because the right choice depends on individual needs. Many people use two or three different credit cards to take advantage of the various benefits each one offers. This approach allows them to maximise the advantages provided by different credit card types.

Frequently Asked Questions (FAQs)