Key Differences Between Credit Cards Offered by Indian Banks

With the variety available in credit cards offered, the choice to find the right one can be confusing. One of the approaches to simplify the decision is to know the broad categories of cards provided by the bank. The credit cards are generally designed to meet the spending habits, financial needs and goals of individuals. With people belonging to different income groups and usage patterns, the provided cards come with features and benefits that suit them accordingly. Here are the insights into the different types of credit cards to help you choose the one that aligns with your financial habits and offers maximum value.

Types of Credit Cards Offered by Indian Banks

Here are the insights into a few most common varieties of bank credit cards:

Cashback Credit Cards

These bank credit cards offer direct cashback as rewards on every purchase. As the name suggests, the cashback received from cashback credit cards is a certain percentage of an individual’s own expenditure. They are widely chosen owing to the frequent shopping habits and online bill payments. It helps earn cashbacks for all eligible transactions.

Cardholders may also get reward points in specific categories. The cashback earned is generally credited to the card account. With that said, there are preset criteria by the bank that should be met to avail the benefit. Also, there may be a limit to the amount of earned cashback.

Lifestyle Credit Cards

Also referred to as premium cards, these bank credit cards offer high rewards, cashback and multiple exclusive perks. These are provided to individuals with high income and a strong personal credit report. The lifestyle credits are better suited for people who spend high amounts on lifestyle-based expenses such as entertainment, travel, dining, wellness and shopping.

These cards also offer luxury benefits such as hotel vouchers, airport lounge access, golf clubs, and merchant partnerships. Banks may also offer a personal relationship manager. The lifestyle credit cards are, however, associated with comparatively high annual fees.

Note: Their upgraded versions also exist, such as super-premium credit cards. These are also available for high-income individuals and offer more benefits in addition to the ones provided with premium credit cards.

Co-Branded Credit Cards

The co-branded credit cards are offered in partnership with the top and well-known brands. With this card, individuals can expect high rewards, discounts and exclusive offers on making a purchase from those brands. One of the common examples is a bank credit card co-branded with Amazon.

Getting a co-branded credit card generally does not require a high credit score. Also, these are globally accepted and may offer a fee waiver on meeting the specific conditions.

Secured Credit Cards

These bank credit cards are designed for individuals looking to establish, build or rebuild their credit history. These cards are offered against a fixed deposit held in the issuing bank. It decreases the risk profile of the cardholder for the bank.

Secured credit cards offer limited advantages but are helpful for improving the credit score through responsible usage and timely payments. These are generally chosen by first-time card users or by people with low or no credit history.

Reward Credit Cards

The reward credit cards are designed to offer different types of rewards rather than any specific one, like cashback. With this card, the cardholders can receive points, cashback or other incentives that can be gathered and redeemed for various services, products or discounts. Depending on the bank’s policy, the cardholder may also carry forward the reward to the next financial year.

The reward bank credit cards offer rewards on eligible transactions only. For instance, a reward credit card may offer 2 reward points for every ₹100 expenditure.

Business/Corporate Business Credit Cards

These are offered by banks to companies and business owners for efficient management of their expenses. They offer expense tracking, rewards on business purchases and higher credit limits. Certain banks may also offer additional features like employee card issuance and spending controls.

Travel Credit Cards

For customers who are frequent travellers, the bank separately serves them by offering travel credit cards. These cards offer benefits like hotel points, air miles, travel insurance and airport lounge access. The available benefits can be used to avail discounts, reduce charges or allow free foreign exchange transactions and earn free tickets or stays.

The travel insurance benefits would cover issues like lost luggage, trip cancellation and medical emergencies abroad.

Fuel Credit Cards

The travellers with high expenditures on fuel can find these as the best option, meeting their needs. The fuel credit cards generally offer reward points, cashback and fuel surcharge waivers depending on the set terms and conditions. The cards may also be available in partnership with certain fuel stations to further accelerate savings.

Key Differences Between Bank Credit Cards

Note: There can be more perks available with each card, depending on the type of card and the offering bank.

Final Words

Bank credit cards are designed to fit in the diverse financial needs, spending patterns and lifestyle preferences of individuals. From basic secured cards for beginners to premium lifestyle and travel cards, each type is designed to offer maximum benefit to its user category.

The right choice depends on understanding the eligibility for perks and offers and limitations of the card, along with developing the right strategy to use it. It is also recommended to check the fees and other charges of the cards before finalising the choice.

FAQs

1.What is the difference between a debit and a credit card?

The difference between debit and credit cards is that a debit card deducts the existing funds from the account, but a credit card offers borrowed money for the expenditure. The money in credit card can be borrowed upto a certain limit set by the issuer and needs to be repaid later within a specific time frame.

2.Should I get a credit card?

If you are a financially disciplined individual who can pay their balance timely and completely, and if you want to build credit, then a credit card is the right option for you. It can offer rewards that help in savings.

3.What is the interest rate on credit cards?

If the credit card payment is not made by the due date, interest is levied on the cardholder. The interest rates are 2.5% to 3.75% per month, , with rates varying among the lenders.