A credit card is a modern world currency and comes with different rewards, benefits and privileges. Hence, a credit card can be categorised into various categories depending depending upon the available rewards, benefits and perks which comes along with it.
It is necessary to understand the type of credit card you are applying for, which saves you from the trouble later. By understanding the credit card types, you can simply choose the best credit card according to your suitability.
Categorisation of Credit Cards
Credit cards can be divided into various categories depending upon the rewards and features offered on the card. We have divided credit cards into 10 various categories based on the following – spending behaviour of a cardholder, cardholder’s profile, credit facility provided by the bank/FI, interest rates, guarantee and technology.
Based on Benefits against Spending
- Rewards Credit Cards
- Cashback Credit Cards
Based on Spending Behaviour
- Premium/Lifestyle Credit Cards
- Travel Credit Cards
- Fuel Credit Cards
- Credit Cards for Family
- Credit Cards for Frequent Spenders
Based on Interest Rates
- Low Interest Credit Cards
Based on Credit Guarantee
- Secured Credit Cards
- Unsecured Credit Cards
Based on Working Profiles
- Business Credit Cards
- Corporate Credit Cards
Based on Card Charges
- Zero Annual Fee Credit Cards
- Credit Cards for High-Net Worth Individuals
Based on Cardholders’ Profile
- Student Credit Cards
Based on Credit Facility
- Charge Credit Cards
- Balance Transfer Credit Cards
Credit Cards based on the Benefits Against Spending
Rewards Credit Cards
Just as the name indicates, a rewards card is a type of credit card on which the cardholder earns a certain reward value against the eligible credit card spend. These rewards can be in the following form – reward points, cash back and air miles. However, the cardholder earns the reward benefits only if he/she spend a minimum threshold per transaction. This threshold amount is preset by the bank/FI and the cardholder earn a collective reward value against the total amount of the transaction in the form of reward points, cash back or air miles. For an example, the minimum eligible transaction for an HDFC Credit card is Rs. 150. So a HDFC credit cardholder has to make a minimum transaction of Rs. 150 in each card swipe in order to earn reward benefit against the purchase made on the card. If the cardholder make the transaction less than Rs. 150, then he/she will not be eligible for the reward benefit though the transaction will be billed into his/her credit card account.
Reward credit card is one of the main card types. The reward benefits earned on the card is accumulated into credit card account by the next statement month. Few of the popular rewards credit card are as follows – SBI PRIME Credit Card, HDFC Regalia Credit Card, SBI SimplyCLICK Credit Card, and SBI SimplySAVE Credit Card.
Cashback Credit Cards
As the name indicates, cashback cards are the type of credit card which offers reward benefits in form of cash back only. Unlike rewards credit cards where a cardholder has the option to redeem the accumulated reward value either against the charges made on the card or against the air miles depending upon the facility offered by the bank/FI, the reward value earned on a cashback credit card can only be redeemed against the credit card bills.
Although, cashback credit cards have limited redemption options but sometimes offers better reward value as compared to rewards credit card. However, the features and privileges available on cashback cards are still way limited than rewards credit cards. Two of the most popular cash back cards available in India are Bharat Cashback Credit Card by HDFC Bank and CITI Cash Back Card from Citibank.
Credit Cards based on Cardholder’s Spending Behaviour
Premium/Lifestyle Credit Cards
Premium Credit Cards, also known as “Lifestyle cards”, are the type of credit cards which are rich in terms of reward value and privileges available on the card. These credit cards usually comes with exclusive lifestyle benefits such as complimentary access to premium airport lounges, free golf games at premium golf courses, low interest rate, high credit limit, savings on foreign transactions, premium concierge service, cash back on shopping at partner brands and high reward value.
These credit cards are a complete package of high rewards benefits and exclusive unmated privileges. However, all these perks comes with high annual charges usually around Rs. 5,000 or above and offered to credit cardholders who are maintaining premium banking relationship with the bank. Hence, managing these credit cards are not easy. SBI Card ELITE, HDFC Regalia Card and SC Ultimate Mastercard World Card are a few examples of premium credit cards.
Travel Credit Cards
A travel card is a type of credit card on which cardholder earn reward benefits on travel related transactions as compared to non-travel purchases billed on the card. These cards are mainly awards good value only if used on travel expenses. Hence, making them most suitable frequent travellers.
These cards either offers air miles on eligible transactions which can be used directly at partner travel brands such as airlines and railways, or offers incremental reward points on travel related expenses which can be redeemed against air miles on partner airlines or travel vouchers at partner brands. A few of the well known travel credit cards are Air India SBI Signature Card, IRCTC SBI Platinum Card, American Express MakeMyTrip Card, Axis Vistara Credit Card, CITI PremierMiles Card and HDFC Diners ClubMiles.
Fuel Credit Cards
The only difference between a fuel credit card and non-fuel credit cards (rewards or cash back) is that you earn rewards points on fuel transactions whereas other cards doesn’t offer any benefit on purchasing fuel products. Although, cardholders do receive fuel surcharge waiver on non-fuel cards, equal to 1% of the fuel transaction where bank predefined a minimum and maximum transaction amount.
These fuel products includes petrol, diesel or any other petrol products. However, the cardholder must keep in mind that these reward value against fuel purchase can only be earned if the credit card is swiped at the EDC machine of the same bank.
If the card has been swiped on other bank’s EDC machine, then the transaction will be excluded from the benefit and cardholder won’t earn any reward points against it. BPCL SBI Card and IndianOil CITI Platinum Card are one good example of fuel credit cards.
Credit Cards for Family
Family credit card can be either a reward card or a cashback credit card where cardholder earns better reward value on family related categories like shopping at departmental and grocery stores, dining, utility bill payments and movies related transactions.
Apart from it, family credit card also gives good reward value on other categories like travel, shopping, international transactions along with surcharge waiver on fuel transactions. Although, these benefits are comparatively lower than what’s being offered on purchases against family related categories. A couple of popular family credit cards are HDFC Freedom Credit Card, SBI Card PRIME, SimplySAVE SBI Card and SC Platinum Rewards Credit Card.
Credit Cards for Frequent Spenders
Frequent Spenders’ credit card are the ones which offers comparatively better reward value and benefits on shopping related expenses. These expenses include shopping at partner brand stores as well as online shopping.
Similar to family credit card, these credit card also offer slightly lower but good reward value on other categories like travel, international transactions, bill payment, and dining etc. Apart from it, you may also get exclusive cashback offer at partner brand stores or e-commerce websites. Some of the well known credit cards for frequent spenders are as follows – SC Landmark Rewards Platinum Card, First Citizen CITI Credit Card, and SBI SimplyClick Credit Card.
Credit Cards based on the Applicable Interest Rates
Low Interest Credit Cards
Low interest credit card, also known as low APR credit card are the credit cards which offers very low interest rates on purchases made on the card. The APR applicable on these credit card usually revolve around 25% to 30% as compared to 39% to 40% on regular credit cards.
These credit cards are usually are low to average in terms of rewards and privileges such as credit card offered by Indian Bank which comes with annual percentage rate as low as 19.92% and Punjab national bank offering low interest rate of 29.40%. However, some of these credit cards are premium credit cards which comes with low apr but great reward value and annual benefits like Infinia Credit Card by HDFC Bank offering low interest rate of only 23.88% and Indulge Card by Indusind Bank offering interest rate equal to 21.48%.
Whereas some of these cards can only be availed if you have a fixed deposit account in the bank but pretty average in terms of benefits like Insta Easy Card by Axis Bank which comes with an interest rate equal to 30% per annum or credit card offered by Tata cards.
Credit Cards based on Credit Guarantee
Secured Credit Cards
As indicated by the name, secured cards are the credit cards which the banks/FIs offers to a cardholder only if the cardholder agrees to provide an intangible security as a lien against the credit limit offered on the card. Usually bank/FI takes fixed deposit as the security where fixed deposit account is opened in the same bank and being maintained for at least past 6 months.
As for the minimum fixed deposit amount, it depends upon the bank/FI. Most of these credit cards can be availed against a minimum fixed deposit amount of Rs. 20,000 like Axis Bank Insta Easy Card and Imperium Platinum Card by IDBI Bank. Though, some of these cards comes against a high fixed deposit amount such as YES Bank Prosperity Rewards Plus Card Against FD where the minimum fixed deposit amount is Rs. 50,000.
Unsecured Credit Cards
Unsecured credit cards are the ones against which can be availed without offering any security to the bank. However, the cardholder needs to meet the income criteria which differs depending upon the credit card one is applying. The banks/FIs demands income documents as a proof to make sure that the cardholder is risk free and capable to pay the credit card bills. In case the cardholder is a salaried individuals, the bank/FI demands salary proof such as Salary Slips/Certificate along with ITR/Form 16. And, if the cardholder is a self-employed individuals, then he/she must provide ITR for last two years.
Most of the credit card offered these days by the banks/FIs are unsecured credit card and offered on the basis of cardholders’ credit history. However, eligibility criteria can quite high sometimes depending upon how exclusive the is card.
Credit Cards based on Cardholder’s Working Profile
Business Credit Cards
The Business credit cards are a type of credit cards which are offered to small to large businesses. Business Credit Card is similar to regular credit card except that the cardholder should be a self-employed business owner. Being a business owner, you can avail the business credit card either in your name or in the name of the business. Business credit cards usually comes with high credit limit as compared to regular credit cards. Most of the banks/FIs offers these cards including private and public sector banks such as HDFC Business Regalia Card and HDFC Business MoneyBack Card.
Corporate Credit Cards
Corporate credit cards, as the name indicates, are offered to the corporate individuals. These cards can only be availed in the name of the company and have the name of the corporate written on it. The main difference between corporate credit cards and business credit cards is that the corporate cards are offered to large businesses generating revenues in millions to billions and given to the employees to utilise for work related expenses only. On the other hand, business credit cards are for both kinds of expenses personal and work and are offered to self-employed personnel running small businesses.
Credit Cards based on Card Charges
Zero Annual Fee Credit Cards
These credit cards comes free of cost, that means you don’t any charges to carry the card. The cardholder is only due for the amount made against the transactions and no annual fee is charged to the cardholder. These credit cards are usually low in benefits and privileges available on the card as compared to credit cards which comes with an annual fee, and sometimes have high interest rates. A few of zero annual fee cards are as follows – Canara Bank Global Gold Card, and Dhanlaxmi BankPlatinum and Gold Credit Cards.
Credit Cards based on Cardholders’ Profile
Student Credit Cards
Student credit cards are similar to regular credit cards, though, these credit cards are only offered to college students where the cardholder must be above the age of 18 years. Since these cards are offered to students, the cardholder doesn’t need to provide any income proof for eligibility criteria. Credit cards for Student usually have low interest rate and comes with longer validity period than regular credit cards.
Credit Cards based on Credit Facility
Charge Credit Cards
Charge credit cards are a different kind of credit card offered without revolving credit facility. Since there is no provision on revolving credit facility on these cards, the cardholder has to pay bill amount in full before the payment due date. Currently, no other bank/FI offers charge cards in India other than american express and there are only two cards being offered, American Express Gold Charge Card and American Express Platinum Charge Card.
Where the income criteria for these cards are usually higher than regular cards, it comes with huge credit risk. A single payment default can ruin your credit score big time.
Balance Transfer Credit Cards
Balance transfer credit cards are regular credit cards except that these credit cards comes with a facility to transfer their credit card debt from one bank to another. Almost all the banks/FIs offers balance transfer facility to the cardholder where the card user can transfer credit card balance to other bank’s new credit card. The credit card debt transfer to a new card can be paid in monthly instalments over a period of time. However, cardholder is charged a certain amount as a processing fee whereas there is no interest rate applicable usually for first three months. And then the bank/FI levies a certain interest rate on the outstanding amount.