What is a Credit Card?
Credit cards are issued by banks and financial institutions, allowing the customer to make purchases and pay for different services by borrowing money from them. A credit card also offers you benefit from rewards, cashback, interest-free period, and much more. The demand for credit cards into the Indian market is increasing rapidly, and for that reason, the banks and the financial institutions have launched plenty of credit card options for the customers to choose.
There is a variety of credit cards available in the market having different features and benefits linked to them. The most popular of them are premium credit card, business credit card, lifetime free credit cards, cash back credit card, co-branded credit card, fuel credit card, and many more.
How to apply for a credit card?
Nowadays, it is easy to get a credit card if you meet the eligibility criteria. One does not need to visit the bank branch. The credit card application is available online. You can visit the web portal of the bank and apply for a credit card by filling out some necessary details like name, email ID, income, address, number, etc. You will get a call from credit card representative from the bank who will guide you through the process. The representative will also come to collect the documents at the doorstep.
People who are not comfortable with the online method can also use credit card application offline. You have to visit the branch and communicate about the kind of credit card you want. Fill the details for the form and provide KYC(Know Your Customer) documents and identity proof, as well as passport size photos.
How does credit card work?
Credit cards are simply a form of a loan. The bank or financial institutions that are issuing these credit cards usually is extending its customer line of credit. Credit cards are a type of unsecured loan where an individual does not require to give any collateral or mortgage an asset to receive it. The bank and the financial institutions will check the creditworthiness of an individual and then decide to issue a credit card with certain limitations and features.
Features/ Benefits of a credit card
- Emergencies: whenever there’s an emergency or another kind of urgent cash requirements, a credit card can make immediate credit available.
- An alternative to cash: having a credit card is a safe and sound alternative rather than carrying bundles of cash with you.
Secure transactions: nowadays, credit cards come with a chip and pin system, thus allowing you to make safe and secure transactions.
- Making big purchases: the whole concept of “buy now and pay later” makes it easier for people to make more significant purchases and set up an EMI payback method with the bank.
- Welcome offers: most of the banks offer different welcome offers to cardholders like gift vouchers, discounts, or bonus rewards points, etc.
- Reward points or cashback: Every time you purchase the credit card, you will receive a few reward points or direct credited amount to your bank account.
Here are some of the various types of credit cards:
1.Shopping credit card:
These cards mainly focus on lifestyle benefits such as a discount on apparel, footwear, etc.
2. Travel credit card:
These credit cards offer all the usual benefits along with extra benefits such as airport lounge access, air mile earnings, air accidental insurance, and many more.
3. Fuel credit card:
As the name suggests, the benefit would be in the form of a fuel surcharge waiver and bonus reward points that you earn when you refill your vehicle.
4. Entertainment credit card
For those who love to go to movies, concerts and events, for them it is a good option.
5. Grocery credit card
If you shop for groceries using your credit card, it is better to get a grocery credit card.
6. Co-branded credit cards
Some credit cards are co-branded with the airline, hotel, clothing stores, or other brands and give you benefits if you shop with specific brands.
7. Rewards credit cards
The credit card that offers you extra rewards than usual is known as reward credit cards.
8. Kisan credit card
Kisan credit cards in India are provided to the rural farmers so that they can get access to credit at the preferred rates.
9. Student credit cards
The student credit card in India is still in the nascent stage. Some banking and financial institutions have introduced this concept. These cards are only offered to those who are 18 or older and enrolled in full-time education institutions.
10. Balance transfer credit cards
This is the type of card that is generally bought to pay off the outstanding amount on one card with the other.
In a digitally advanced generation, credit cards mean more than plastic money. However, make sure you check your repaying capacity before choosing a credit card (as there are several credit card types offered) that suits your specific financial necessity. There are fines and charges associated if you exceed your credit card limits and do not make timely payments. So do take due care before making any financial decisions which may have a long-lasting impact. Remember…
Money isn’t the root of all Evil.