Credit card usage in India has increased significantly in the years following demonetisation in 2016. Post demonetisation, changes in consumer behaviour, especially in millennials, has largely contributed to the growth of credit cards. In the current fiscal year, rise in the number of cardholders below the age of 30 years has been recorded at 35%.
More than 93% of all credit cardholders in India use these financial tools for online purchases and transactions, according to data provided by TransUnion CIBIL. Such data also mentions high usage of credit cards in the cities of Mumbai, Ahmedabad, Delhi, and Pune. The rising usage of credit is also attributed to the improvement in payment infrastructure, the increasing types of credit cards, and certain benefits which individuals can reap from those. Growing awareness about these credit cards has largely contributed to its growth.
What are the different types of credit cards?
Primarily, there are two types of credit cards – secured and unsecured. Unsecured credit cards are the most commonly used type. These cards are offered with varied benefits by card issuers. Every single individual is sure to find a card variant to suitably meet his or her financial requirement.
You should properly assess the different variants of cards and choose the right credit card for yourself.
1. Secured credit card
A secured credit card is offered against an asset such as a fixed deposit. Most financial institutions prefer a fixed deposit which they can use as a collateral asset. Such a card is ideal for individuals with a below-par credit score or no credit history.
You can also decide to avail a secured card even if you possess a substantial CIBIL score. Features shared by a secured card are similar to that of an unsecured card, i.e. you have a pre-determined limit, earn reward points, and use it for purchases and transactions online. However, these cards do not come with as many benefits as regular unsecured credit cards. In case you do not have a healthy CIBIL score, use your credit card wisely to improve it over time.
2. Travel credit cards
These credit cards come with offers, discounts, vouchers, reward points, and other benefits on travel related purchases or services. Travel credit cards offer a huge range of attractive offers on air ticket bookings, hotel bookings, holiday trip packages, etc.
You can earn reward points which you can redeem against complimentary accommodation, flight ticket discounts, etc. You can redeem such points from your card issuer’s official portal or view the partnered brands to access and avail the offers. Certain high-end cards such as the Bajaj Finserv RBL Bank SuperCard also provide complimentary lounge access to airports.
3. Business cards
These cards are exclusively issued to business entities. In case you own a business, you can get a credit card for it. Such a card will allow you to maintain the expenses of your business.
4. Balance transfer credit cards
Most financial institutions offer such credit cards. You can transfer any outstanding balance on your existing credit card to a balance transfer card. Ensure such a credit card offers better terms than your previous financer.
These are the few types of credit cards that you can avail in India.
Eligibility criteria to avail such cards
Different financers mandate varying eligibility criteria on credit card approval. The following eligibility criteria mentioned below are suggestive and depending on your preferred financer might vary.
- Your age should be within 25 – 65 years of age.
- You should reside within areas where your card issuer operates.
- You should not have a poor payment history (applicable for unsecured cards.)
- You must possess a credit score of 750 or above (applicable for unsecured cards.)
When you apply for a credit card, ensure that you have assessed all the prevalent variables according to your expense pattern to benefit the most of it.