For decades, people have been believing in various myths related to the working and security of credit cards that have discouraged them from applying for one. However, with time and access to information on the internet, people have started to opt for credit cards over debit cards. The scenario is also very similar in India. In 2019, the number of credit card users in India was 52 million and within a year, that number jumped to a whopping 57.4 million in 2020.
As people are being made aware of the host of advantages that come with a credit card, its popularity is rising like never before. With the number of credit card users on an unprecedented rise, it’s essential that people know about the intricacies involved. One of the basic characteristics of a credit card is that not every credit card is the same.
There are different categories of credit cards issued by banks and credit card companies. Different credit cards target different types of customers, with different lifestyles and preferences. Therefore, it is not possible to definitely conclude which type of credit card is best for everyone. Some credit cards are ideal for people who are avid travelers, some for shopping enthusiasts, while some others are strictly for corporates, and hence, it’s not enough to get any credit card.
With most credit cards having different reward categories and offers, it is wise to know more about them before opting for one.
Know about the purposes of different types of credit cards and what to expect from them, before you make a final call.
- Travel Credit Cards
These are credit cards that are specifically designed to aid frequent travelers and flyers. Most of the rewards for travel credit cards come in the form of air miles that can be then used to buy flight tickets.
- Cashback Credit Cards
Cashback credit cards are specifically designed to pay back a certain amount of the payment to the cardholder. These are extremely popular among shoppers because these banks usually partner with famous shopping outlets (online or offline).
- Fuel Credit Cards
Fuel credit cards are special cards provided by banks to pay for petrol, diesel, or LPG. Using a fuel credit card can help you save a lot of money as these cards often provide discounts on fuel purchases. Another huge benefit of owning these cards is fuel surcharge waivers, which allow you to buy fuel only at a wholesale price instead of paying the surcharge fees as well.
- Corporate Credit Cards
Corporate credit cards are a great tool for both the employer and the employee. On one hand, it can help the employer to have a paperless account of all the employee’s transactions while on a business trip and limit their daily transaction. It can also allow the employees to not pay for business expenses from their own pockets. The card covers flight tickets, hotel stays dining and all other expenses. Most banks tie up with corporates to determine a set of rules and regulations that the employees have to abide by.
- Lifestyle Credit Cards
Lifestyle credit cards help one to enjoy benefits like shopping reward points and fuel surcharge waivers. These cards typically enhance a person’s lifestyle choices by giving discounts and cashback on shopping and dining experiences, among others. There are exclusive benefits given to shoppers. While for food enthusiasts, these cards often provide benefits like access to a members-only dining experience at renowned clubs. They also give accelerated reward points on movie tickets as they take up a huge part of people’s leisure time.
- Entertainment Credit Cards
As the name suggests, entertainment credit cards are exclusively meant for offers on movie theatres, clubs, and amusement parks. These are often a good choice if you want to earn some rewards while you spend money. As shopping is also a huge part of entertainment for some, these cards also have accelerated shopping rewards. - Prepaid Credit Cards
Prepaid credit cards are a great choice for people who don’t have a good credit profile. Prepaid cards don’t work like traditional credit cards as the bank does not approve a line of credit for the customers. Instead, you are only allowed to spend a fixed amount of money that you deposit in your prepaid card account. You can reload the money multiple times a month, but you can not spend more than what’s loaded in your account. They are also a good tool to build up credit, and then get a credit card of your own later.
- Secured Credit Cards
A secured credit card is also not within the framework of a traditional credit card. You can deposit a certain amount as collateral to the bank first, and only then get access to a secured credit card. This is again used a lot by people who have no credit history or have a poor one. Most banks like SBI have a very nominal collateral amount, like Rs. 25,000 for a secured credit card.
Every credit card type comes with its own set of merits that suits a particular lifestyle. There are shopping credit cards that are best-suited for shopaholics, while travel credit cards are ideal for travel enthusiasts and frequent travelers. With so many types of credit cards on offer, you can choose one based on your lifestyle, spending pattern, and unique requirements.
