What are the types of credit cards?

The Central Bank of India first introduced credit cards in 1980. They work on the concept of borrowed funds that have to be paid back within the due date. Credit cards are used as cash that you haven’t earned. The incapacity to pay back the borrowed amount within the time limit makes you liable to pay interest on the balance. Financial institutions in India offer different type of credit card options to suit your specific needs.

Types of Credit Card Accounts

There are 3 types of credit card account type

Revolving credit account

Revolving credit accounts have pre-assigned limits on credit and are subject to fees and finance charges.

Installment credit

An installment credit card account is in the form of a loan. You receive the credit amount as a lump sum. The bank gives you a fixed schedule for payments until the loan is not paid off completely.

Open credit account

Open credit is a credit account that lets you purchase electronics just like a common credit card.

Alternate Read: Personal Loan or Credit Card Which is Better

What are the Type of credit card in India

India has different credit card type that help you enjoy various benefits and discounts. Let’s discuss their uses and types.

Shopping credit card

A shopping credit card is a perfect choice for shopaholics. Banks partner with stores online and offline to offer great discounts to customers. Shopping credit cards also give you discounts on transactions made and provide cash backs and vouchers.

Credit card for traveling

A travel credit card is the best option for frequent travelers. You can opt for this card for both international and domestic travel. Travel cards offer a gamut of benefits like free access to airport lounges and spa services, reward credits on travel miles, low transaction fees for international payments, discounts on rentals and hotel bookings, and much more.

Secured credit cards

Secured credit cards are unlike regular credit cards and need you to make a deposit. The deposit you make acts as collateral against the purchases you make with the card. In a scenario where you fail to pay off your balance, the issuer withholds the deposit. There are no limitations on spending as long as you can pay off in time. Secured cards help build your credit worthiness and are easily approved.

Unsecured credit cards

Unsecured credit cards are just the opposite of secured credit cards and do not require you to deposit any amount as collateral against your purchases. Most of the credit cards are unsecured. So, you need to have an excellent credit score to use them.

Fuel credit cards

Fuel prices are on a significant rise. A fuel credit card allows you to save on fuel purchases. If you are someone who commutes regularly and is looking to cut down your fuel expenses, you can apply for a fuel credit card. A fuel credit card lets you avail of benefits like fuel surcharge waiver, rewards, and cash backs.

Cashback credit cards

A cashback credit card provides you with the benefit of cashback on selected purchases. A few cards offer direct cash backs. If direct cash backs are not offered, you can use the cashback for shopping or a statement credit.

Additional Read: 10 Ways to Improve Your CIBIL Score

Reward credit cards

Reward credit cards are designed to earn high rewards on all kinds of expenses. They also offer accelerated points on expenditures. Although the reward points are less compared to the amount spent, it gets accumulated over time and can be redeemed in the future.

Business credit cards

Business cards are used for business expenses. They let you maintain a different account for personal and business transactions. To avail of a business credit card, you must have a good credit history.

Co-branded credit cards

Co-branded credit cards have tie ups with brands. Shopping with these brands lets you avail of attractive discounts and offers. It’s a win-win situation for you as well as the brand.

Additional Read: How to File Your Income Tax Return?

Conclusion

Indian banks offer different type of credit card options based on every person’s needs. And although credit cards are easily available, it is important to spend in your financial capacity to avoid the accumulation of interest and fines. Make sure to go through the charges applicable before choosing a credit card and be smart and safe.