What is Credit Card CVV Number?

The CVV (Card Verification Value) Number on your debit or credit card is a 3 or 4 digit code, used for security purposes during purchases at Online Merchants. The number on VISA, MasterCard and Discover branded credit / debit cards is a 3 digit numeric code, and on American Express branded credit / debit card it is a 4 digit numeric code.

The CVV number can be located at the back of your credit or debit card , as illustrated in the image below:

CVV Number

Providing your CVV number to an online merchant proves that you actually have the physical credit or debit card, and helps to keep you secure while reducing the chances of fraud. CVV numbers are NOT your card’s secret PIN (Personal Identification Number).

You should never enter your PIN number when asked to provide your CVV. PIN numbers allow you to use your credit or debit card at an ATM or when making an in-person purchase with your debit card or a cash advance with any credit card, while the CVV number is used on purchasing items and goods at Online Merchants.

CVV numbers are also known as CVC (Card Verification Code) or CSC numbers (“Card Security Code”), as well as CVV2 or CVC2 numbers, which are the same as CVV numbers, except that they have been generated by a 2nd generation process that makes them harder to “guess”.

Need of CVV Number

Getting the card details of someone else is quite easy nowadays. For example CCTV cameras are in operation in almost every shop and follow you while paying. Not only because of this fact the CVV / CVC verification code is located on the back of your payment card and represents the basic security feature. Therefore CVV/CVC code is required for all online payments where the card is not present and the PIN code cannot be entered.

SBI Credit Card Loan

Being a SBI credit card holder, you have various options to avail funds in emergency. However, a credit card account with good repayment history and good credit score is essential to avail the funds on your SBI credit card. If you want to avail funds for a longer period of time, then options like SBI Card Encash, Cash Withdrawal at ATMs and Flexipay are best suitable ones. Otherwise, SBI Easy Money is the best option for short term advances.

Although, you must be careful when finalise your choice depending upon how big of an amount you want to borrow and how much would it cost you in the end, since options such as Cash Withdrawal at ATMs can be a huge burden on your pocket.

SBI Credit Card Loan Options

SBI Card Encash

Applicable Interest Rate

12.7% – 29% per annum

Tenure Options

12 Months / 24 Months / 36 Months

Loan Amount

Min Rs. 10,000 to equal or above credit card limit

Processing Charges

2% of the advanced amount
Min Rs. 499 to Max Rs. 3000

Foreclosure Charges

3% of the principal outstanding amount

Cancellation Charges

NIL
If cancelled within 45 days of booking.
3% on the principal outstanding.
If cancelled after 45 days of booking or the Encash cheque has been cleared.

SBI Card Encash is one of the easy way to avail cash on demand, offered to existing SBI Credit Card holders maintaining a good history with the bank. With Encash, SBI Card offers it card holders a feasibility to borrow a minimum of Rs. 10,000 to equal or above their available credit limit depending upon the factors such as Past transaction / repayment behaviour and the credit risk profile of the card holder. However, the credit limit equivalent of the advanced amount, will be blocked on the card till the repayment is made in full along with applicable interest rate and one-time processing charges.

SBI Card offering three different tenure options for Encash as following – 12 months, 24 months and 36 months. The interest rate being charged for the facility, ranges from 12.7% – 29% per annum on the advance amount against the credit limit, whereas a one-time processing fee is also applicable equal to the 2% of the amount advanced. In any case, you have to pay a minimum of Rs. 499 for processing charges which can go as high as Rs. 3000 depending upon the advanced amount. Whereas the foreclosure of the Encash booking will also lead to a foreclosure fee equal to 3% of the principal outstanding amount.

The advanced amount will be credited into your bank account within 48 to 72 working hours through NEFT Facility. However, you can also request for a cheque which can be delivered to your doorstep within 3 to 5 working days.

The EMI amount will be added to your monthly credit card statement, where you need to make at least minimum amount due equal to the 5% of the existing revolving balance and the monthly amount due for the facility. Non-repayment or under-repayment of the minimum amount due will result in late payment penalty along with additional interest rate of 3.35% on the delayed/unpaid amount.

SBI Easy Money

Applicable Interest Rate

2.45% per month

Tenure

45 Days

Loan Amount

Min Rs. 5,000 to upto 75% of your available cash limit

Processing Charges

1.5% of the advanced amount
Min Rs. 149

With Easy Money option, an existing SBI card holder can borrow funds for a short period of time (45 days to be exactly) against their available cash limit on the SBI Card within just 48 hours into their bank account through NEFT or delivered to your doorstep within 48 working hours in form of cheque.

One can avail a minimum Rs. 5,000 to maximum upto 75% of your available cash limit. An applicable interest rate of 2.45% per month will be applicable along with a one-time processing fee equal to 1.5% or minimum Rs. 199. An SBI card holder can avail the facility only if there’s no outstanding on his/her card account for more than 30 days.

Cash Withdrawal at ATM

Applicable Interest Rate

3.35% per month (40.2% per annum)

Withdrawal Charges

2.5% of withdrawal amount or Min Rs. 300.
At Domestic ATMs
3% of withdrawal amount or Min Rs. 300.
At International ATMs

Loan Amount

Upto 80% of credit limit
Rs. 12,000 to Rs. 15,000 depending upon the card you are carrying.

With Cash Withdrawal feature available on your SBI Credit Card, you can simply with cash at a nearby SBI ATM. One can withdrawal advance equal to the cash withdrawal limit (Upto 80% of the credit limit) available on his/her SBI Card, subject to maximum advance limit of Rs. 15,000 per day on SBI Card ELITE, Doctor’s SBI Card (in association with IMA), Doctor’s SBI Card, SBI Card PRIME, Central SBI Select+ Card, Central SBI Select Card, STYLEUP Contactless Card, Air India SBI Signature Card, Air India SBI Platinum Card and Rs. 12,000 per day on Apollo SBI Card, SimplyCLICK SBI Card, SimplySAVE SBI Card, SBI Card Unnati, BPCL SBI Card, Yatra SBI Card, Chennai Metro SBI Card, Mumbai Metro SBI Card, IRCTC SBI Platinum Card.

On withdrawal at SBI ATM, you’ll be charged a cash withdrawal fee equal to the 2.5% of the withdrawal amount or minimum Rs. 300 at domestic ATMs and 3% of the withdrawal amount or minimum Rs. 300 at international ATMs whereas the withdrawal amount will also attract an interest rate equal to 3.35% per month (40.2% per annum) from the date withdrawal is made. These will be billed into your credit card statement, and can be paid in once or using the revolving credit facility.

SBI Flexipay

Applicable Interest Rate

11% to 22% per annum

Tenure Options

6 Months / 9 Months / 12 Months / 24 Months / 36 Months

Loan Amount

Min Rs. 2500 to upto available credit limit.

Processing Charges

2% of the principal outstanding amount.
Min Rs. 199 to Max Rs. 1,000

Foreclosure Charges

3% of the principal outstanding amount

Cancellation Charges

NIL
If cancelled within 45 days of booking.
3% on the principal outstanding.
If cancelled after 45 days of booking or the Encash cheque has been cleared.

With Flexipay feature available on your SBI credit card, one can simply avail the loan by converting single or multiple retail transactions (except fuel and cash transactions) of Rs. 500 or above into single flexipay plan within 30 days of transaction date and pay into monthly EMIs, whereas the minimum booking should not be less than Rs. 2500. Hence, making it easier to pay the amount of the selected purchase into instalments. Though, this feature is available only for SBI card holders whose credit card account is being maintained in good health for past 6 months.

SBI Card offer the following tenure options for Flexipay facility – 6 months, 9 months, 12 months and 24 months. A tenure option of 36 months is also applicable if the flexipay booking amount is equal to Rs. 30,000 or above.

The default interest rate applicable is equal to 22% per annum on the principal outstanding amount. However, SBI Card also offers dynamic interest rate as low as 11% per annum to 22% per annum to a select SBI card holders depending upon their credit card history and credit risk profile.

Apart from it, a one-time processing charge is also applicable, equal to 2% of the principal outstanding amount subject to minimum Rs. 199 to maximum Rs. 1,000. The card holder can also foreclosure the availed loan by paying a foreclosure fee equal to 3% of the principal outstanding amount. These charges will be billed into your monthly credit card statement.

How to Avail Loan on SBI Credit Card?

Apply for SBI Card Encash

Book through SBI Card NetBanking

  • Click here to go to your SBI Card Online account and go to the “Benefits” section available on the left-hand side menu. If you’re eligible for the Encash facility, you’ll see a link named “Encash” in Benefit section.
  • Click on “Encash” link and enter the the amount you want to borrow.
  • Now select a repayment period of your choice and interest rate offered to you.
  • Click on “Confirm” to book the service.

Book through SBI Card Customer Support

  • Dial 1860-180-1290 (for BSNL/MTNL landlines) or 3902-0202 (prefix local STD code) from your registered mobile number and connect to the SBI Card Customer Care representative.
  • Make a request for Encash facility to the SBI Card representative. He/she may ask your card information such as credit card number for verification.

Book by sending an SMS

  • Compose a new message and write “Encash”.
  • Send the text to 56767 from your registered mobile number.

Apply for SBI Easy Money

Book through SBI Card NetBanking

  • Click here to go to your SBI Card Online account and go to the “Benefits” section available on the left-hand side menu. If you’re eligible for the Easy Money facility, you’ll see a link named “Easy Money” in Benefit section.
  • Click on “Easy Money” link and enter the the amount you want to borrow.
  • Now select a repayment period of your choice and interest rate offered to you.
  • Click on “Confirm” to book the service.

Book through SBI Card Customer Support

  • Dial 1860-180-1290 (for BSNL/MTNL landlines) or 3902-0202 (prefix local STD code) from your registered mobile number and connect to the SBI Card Customer Care representative.
  • Make a request for Encash facility to the SBI Card representative. He/she may ask your card information such as credit card number for verification.

Withdrawal Cash at nearest SBI ATM

  • Walk into a nearest SBI ATM and swipe your SBI Credit Card into the machine.
  • Choose “Banking” option and select your preferred language.
  • Enter your credit card pin.
  • Now, choose “Cash Withdrawal” option on the screen and enter the amount you wish to withdrawal. Make sure the amount is not more than the allowed credit balance on the card.
  • Click on “Yes” to withdrawal the amount and collect your cash along with transaction receipt.

Apply for SBI Flexipay

Book through SBI Card NetBanking

  • Click here to go to your SBI Card Online account and go to the “Benefits” section available on the left-hand side menu. If you’re eligible for the flexipay facility, you’ll see a link named “Flexipay” in Benefit section.
  • Click on “Flexipay” link and enter the the amount you want to borrow.
  • Now select a repayment period of your choice and interest rate offered to you.
  • Click on “Confirm” to book the service.

Book through SBI Card Customer Support

  • Dial 1860-180-1290 (for BSNL/MTNL landlines) or 3902-0202 (prefix local STD code) from your registered mobile number and connect to the SBI Card Customer Care representative.
  • Make a request for flexipay facility to the SBI Card representative. He/she may ask your card information such as credit card number for verification.

What is a Personal Loan?

personal loan is an unsecured loan taken for personal purposes. It has an easy application process, requires minimum documentation and can be approved in no time. You can use it at your own discretion for any legitimate purpose that you can think of.

Being an all-purpose loan, a personal loan is a dependable source that provides for instant funds to meet your additional expenses emerging suddenly. Be it a trip abroad or a medical emergency popping up out of nowhere, a personal loan is there to share your load.

If you have a good credit history and regular income inflows, you can apply for a personal loan and get approved without much formalities and delays. An easy application process that requires minimum documentation coupled with simple repayment method makes it a favourite for borrowers. Also, there is no requirement of collateral that makes it accessible for a large section of people.

However, you must safeguard various income prospects before opting for a personal loan as there are also certain disadvantages attached to it. For instance, a high fee is charged for processing your loan application. The rate of interest is higher and increases your debt burden and EMIs. The failure of repayment can severely affect your credit score, dampening your future borrowing chances; In case of a default you could be subjected to imposition of sky high penal interest.

Characteristics of a Personal Loan

Unsecured Loan

An unsecured loan is the one that does not require a collateral for borrowing. Most personal loans are unsecured in nature.

Multipurpose Loan

A personal loan provides for the flexibility of usage meaning that you do not need to define the reason for which you are taking the loan. You can use it on your own discretion whether you want to go for a family vacation, purchase a gadget, renovate your house, have a dream wedding, pay your child’s tuition fees, go for a world tour or any other purpose.

Easy Application Process

The application process for a personal loan is quick and easy. You are only required to share basic details such as your occupation, income and existing debts.

Minimum Documentation

There is no involvement of bulky documentation. You just need to submit an identification proof, address proof and an income proof along with your application form.

Quick Approval Process

The minimal documentation and information shortens the verification process and hastens the approval process.

High Interest Rate

As no collateral is required for availing a personal loan so in order to cover the associated risk the bank charges a high rate of interest.

Who can apply for a personal loan?

The eligibility for a personal loan depends on multiple factors which include your age, occupation, income, employment & income stability, residential status & stability, credit score and number of dependents.

Both salaried and self-employed individuals can apply for a personal loan. Even NRIs can avail a personal loan in India. The age of a salaried individual should be less than 60 years and for self-employed individuals it should be less than 65 years for taking a personal loan.

If you are working in a company that is listed with the Registrar of Companies or the bank recognises the company as a customer, your minimum income should be between Rs. 12,000 to Rs. 18,000 if you are residing in Tier II cities while it should be between Rs. 18,000 to Rs. 25,000 for those residing in Tier I cities. If you work in a smaller company then these amounts will be higher by 25% to 40%. Some Banks are shy of lending to BPO’s except the listed ones.

Credit score is a major factor guiding your chances to avail a personal loan. A higher credit score enhances your chances of availing a loan. Generally, a credit score of higher than 750 is required for unsecured loans. For secured loans, a credit score of 650 is also considered as good.

Interest Rates on SBI Credit Cards

Being an SBI credit card holder, one should how much interest rate is levied by the bank against their credit card transactions. This interest rate varies according to the type of the transaction one have made on the credit card, plus an additional interest rate is also charged to the cardholder as a processing fee to access the respective facility. The regular card transactions attracts an interest rate of 2.5% to 3.35% per month depending upon the type of credit card, whereas some other transactions like EMI bounce, foreign currency conversion or exceeding the available credit limits attract an interest rate ranging from 1.5% to as high as 3.5% per month.

Interest Rate Offers on SBI Credit Card Retail Transactions

Interest rates applicable on SBI credit cards varies according to the type of transaction as well as the type of the card you are carrying. It can be varied depending upon if the card has been swiped for a purchase or if the cardholder have withdrawn cash. Apart from it, interest rates can also be distributed based if the credit card is unsecured or secured.

Interest Rates on Retail Transactions on Unsecured Credit Cards

The interest rate levied by SBI on unsecured credit card is equal to upto 3.35% per month or 40.2% annually. However, this interest rate can be increased depending upon if the purchase registered into card account is made in any other foreign currency.

Interest Rates on Retail Transactions on Secured Credit Cards

In case, the cardholder is carrying a secured credit card offered by sbi credit card, then the applicable interest rate is comparatively lower than the unsecured credit card. The interest rate applicable on eligible purchases made on a sbi secured card is 2.5% per month (30% per annum).

Interest Rates on Cash Advance Transactions

The interest rate applicable on cash advance transactions is equal to 3.35% per monthly or 40.2% annually on unsecured sbi credit cards and 2.5% per month or 30% per annum on secured sbi credit cards.

There is no difference in applicable interest rates between retail purchases made on an sbi credit card and a cash withdrawal transaction. Whereas, most of the other competing banks/FIs offers 1% to 1.5% lower interest rate on retail purchases as compared to cash withdrawal transactions.

In addition to the interest rate applicable on the cash withdrawal amount, an additional interest for accessing the cash at the ATMs, is also charged to the cardholder who have withdrawn the cash at the ATM. This additional interest rate ranges from 2.5% to 3% of the withdrawal amount, depending if the cash is being withdrawn at a domestic ATM or an international ATM.

Interest Rate Offers on Other Type of Credit Card Transactions

Interest Rates on Foreign Currency Conversion

An additional interest rate of 1.99% to 3.5% is being charged to each and every foreign transaction made on a sbi credit card weather is an unsecured card or secured credit card.

If the cardholder has made a purchase into US Dollar, then an additional interest rate of 3.5% will be levied on the purchase amount in Indian rupees. Whereas, if the purchase was made in any other international currency than US Dollar, then an additional interest rate of 3.5% is levied on the purchase amount converted into US Dollar and additionally another 3.5% interest rate is applicable on the purchase amount is converted into Indian rupees from US Dollar. Hence, you end-up paying double the interest rate on foreign currency conversion if the purchase was made into any other currency than US Dollar.

Only the SBI Elite credit cardholders are the exception of this high additional interest rate of 3.5% on foreign currency transactions. The sbi elite card owners are given a concession in this interest rate and has to pay only 1.99% interest rate as compared to 3.5% on other sbi credit cards.

Interest Rates on SBI Credit Card Balance Transfer

The interest rates levied by sbi on cardholders for credit card balance transfer is equal to 3.35% per month on the balance transfer amount, where the minimum eligible amount for balance transfer should be at least Rs. 5,000.

Interest Rates on SBI Credit Card Balance Transfer on EMI

The interest rate applicable on sbi credit card for balance transfer of EMI service, ranges from 0.75% to 1.27% per month. An interest rate of 0.75% per month is levied where balance transfer on EMI is availed for 3 months period, and 1.27% per month where balance transfer on EMI is availed for 6 months period. However, the minimum amount for balance transfer on EMI should not be less than Rs. 5,000.

Interest Rates on SBI Credit Card Flexipay Facility

The flexipay facility on sbi credit cards attracts a default interest rate equal to 22% per annum. However, sbi do offer an interest rate as low as 11% or above to some of the select sbi credit card owners, depending upon their repayment history and credit risk profile. The cardholder also has to pay a processing fee interest equal to 2% of the flexipay amount, ranging minimum Rs. 199 to maximum Rs. 1000.

Interest Rates on SBI Credit Card Encash Facility

SBI charges its credit cardholder an annual interest rate ranging from 12.7% to 29% on Encash transactions. The cardholder is also levied with an additional interest for processing fee for availing the service, equal to 2% on the amount availed under Encash facility, ranging from minimum Rs. 499 to maximum Rs. 3000.

Interest Rates on SBI Credit Card Easy Money Facility

In case you wants to avail Easy Money benefit on your SBI credit card, you must know that sbi charges a monthly interest rate equal to 2.45% on the card loan amount along with processing fee equal to 1.5% of the advanced amount.

Additional Interest Rate on SBI Credit Cards

Additional Interest on Over-limit

Whenever an sbi credit card holder excess his/her credit card limit, then sbi levies an additional interest rate of 2.5 % of the over-limit amount, subject to be minimum Rs. 500 as a penalty to overdrawn as per the assigned credit limit. Although, you won’t be receiving any notification from the bank until the transaction is made and the interest is charged to your credit card account. Hence, it is important to know what is your available credit limit whenever you are shopping on your card or withdrawing cash on credit card.

Additional Interest on EMI Bounce

In case you paid your credit card bill through the cheque or if you have availed auto-debit facility to deduct the amount from your saving account to pay your credit card bills, and the transaction got bounced due to insufficient amount in your account, then sbi do charges an additional interest rate of 2% on the amount as a penalty. The cardholder is levied a minimum charge of Rs. 450 against this.

Kredit - Loans & Credit Card

Fund Transfer from SBI Credit Card

An SBI credit card holder can easily transfer funds from his/her SBI card using the various cash advance options offered by SBI. This amount is borrowed against the available credit limit on the SBI credit card and card holder has to pay an interest rate on the transferred amount along with a one-time processing fee.

The interest rate ranges from 1.05% per month to 3.35% per month depending upon the cash advance options card holder has chosen at the time of fund transfer.

Transfer funds Online from SBI Credit Card

SBI Card Encash

Encash is cash advance facility offered by SBI Cards to its credit card holders. By using Encash cash advance method, an existing SBI credit card holder can transfer a minimum of Rs. 10,000 to maximum amount equal to the available credit limit or sometimes above the credit limit. The amount transferred borrowed using this facility will be blocked against the available credit limit on your SBI Credit Card. However, an interest rate has to be paid on the borrowed amount by the card holder, depending upon the tenure the amount is being advanced.

Currently, SBI Card charges an annual interest rate ranging from 12.7% to 29% along with a one-time processing fee equal to the 2% of the advanced amount, paid by the card holder. The card holder can choose a repayment period of 12 months, 24 months or 36 months.

Applicable Interest Rate

1.05% – 2.41% per month

Tenure Options

Minimum 12 Months to Maximum 36 Months

Loan Amount

Minimum Rs. 10,000

Processing Charges

2% of the advanced amount
Minimum Rs. 499 to Maximum Rs. 3000

How to transfer funds from SBI Credit Card using SBI Card Encash facility?

Card holder can just simply transfer the funds online using the SBI credit card online facility or request for the service by calling the SBI credit card customer support or by sending an SMS.

Book through SBI Card NetBanking

  • Click here to go to your SBI Card Online account and go to the “Benefits” section available on the left-hand side menu. If you’re eligible for the Encash facility, you’ll see a link named “Encash” in Benefit section.
  • Click on “Encash” link and enter the the amount you want to borrow.
  • Now select a repayment period of your choice and interest rate offered to you.
  • Click on “Confirm” to book the service.

Book through SBI Card Customer Support

  • Dial 1860-180-1290 (for BSNL/MTNL landlines) or 3902-0202 (prefix local STD code) from your registered mobile number and connect to the SBI Card Customer Care representative.
  • Make a request for Encash facility to the SBI Card representative. He/she may ask your card information such as credit card number for verification.

Book by sending an SMS

  • Compose a new message and write “Encash”.
  • Send the text to 56767 from your registered mobile number.

SBI Easy Money

The Easy Money option is for those SBI card holders who wants to borrow the funds for a short period of time. The card holder can borrow the funds for a maximum of 45 days only and has to pay an interest rate of 2.45% per month. Using the Easy Money cash advance option, the card holder can transfer a minimum of Rs. 5000 to maximum amount equal to upto 75% of the credit limit available on the SBI card. Along with the applicable interest rate, the card holder has to pay a one-time processing fee as well, equal to the 1.5% of the availed amount.

Applicable Interest Rate

2.45% per month

Tenure

45 Days

Loan Amount

Minimum Rs. 5,000

Processing Charges

1.5% of the advanced amount
Minimum Rs. 149

How to transfer funds from SBI Credit Card using Easy Money facility?

Similar to the SBI Card Encash facility, the card holder can also apply for the Easy Money facility either by simply logging into SBI Card online service or by calling the customer care of SBI credit card. Although, the options to apply for the facility by sending an SMS is not available.

Book through SBI Card NetBanking

  • Click here to go to your SBI Card Online account and go to the “Benefits” section available on the left-hand side menu. If you’re eligible for the Easy Money facility, you’ll see a link named “Easy Money” in Benefit section.
  • Click on “Easy Money” link and enter the the amount you want to borrow.
  • Now select a repayment period of your choice and interest rate offered to you.
  • Click on “Confirm” to book the service.

Book through SBI Card Customer Support

  • Dial 1860-180-1290 (for BSNL/MTNL landlines) or 3902-0202 (prefix local STD code) from your registered mobile number and connect to the SBI Card Customer Care representative.
  • Make a request for Encash facility to the SBI Card representative. He/she may ask your card information such as credit card number for verification.

Transfer funds Offline from SBI Credit Card

Cash Advance at ATMs

Cash Advance at ATMs is an another method using which an SBI card holder can transfer funds from their SBI credit card account to another account. However, the card holder has to do the entire process manually since it’s an offline method. The card holder can withdrawal an amount as high as upto 80% of his/her SBI card’s credit limit.

Depending upon the credit card, the card holder can withdrawal Rs. 12,000 to Rs. 15,000. Additionally, a one-time cash withdrawal fee ranging from 2.5% to 3% of the withdrawal amount will be levied to the card holder’s account, subject to minimum Rs. 300.

Applicable Interest Rate

3.35% per month

Loan Amount

Upto 80% of credit limit
Rs. 12,000 to Rs. 15,000 depending upon the card.

Withdrawal Charges

2.5% of withdrawal amount or Min Rs. 300.
At Domestic ATMs
3% of withdrawal amount or Min Rs. 300.
At Domestic ATMs

How to transfer funds from SBI Credit Card using Cash Advance at ATMs?

  • Walk into a nearest SBI ATM and swipe your SBI credit Card into the machine.
  • Choose “Banking” option and select your preferred language.
  • Enter your credit card pin.
  • Now, choose “Cash Withdrawal” option on the screen and enter the amount you wish to withdrawal. Make sure the amount is not more than the allowed credit balance on the card.
  • Click on “Yes” to withdrawal the amount and collect your cash along with transaction receipt.

Types of Credit Cards

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 CardHDFC Regalia Credit CardSBI 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.

Credit Card Loan

credit card holder can avail a pre-approved personal loan on their credit card within or over the card limit if found eligible by the lender. Being pre-approved loans, credit card loans do not need any collateral or extra documentation and are disbursed quite quickly.

There is also an EMI option in most of the credit card loan schemes which allows you to pay off your heavy expensive purchases over a span of time in the shape of instalments.

You have to pay a certain rate of interest which may vary between 13% to 32% per annum depending upon the lender. The eligibility criteria for this type of loan is a bit strict as lenders offers this option only to the peoples having sound financials and a good repayment history.

Advantages of Credit Card Loans

Pre-approved and Non-Collateral

The credit card loan are of pre-approved nature so they do not require any further documentation and even collateral to avail the loan.

EMI Option

The credit card loan provides the EMI option for purchases over a certain amount so you can divide the expense on your heavy purchases over a span of time in the shape of EMI.

Transfer of Balance Outstanding

Most of the Banks/FI also provide the option to transfer the balance outstanding from other cards to one single card and pay in EMIs.

Easy Disbursal

Being pre-approved most of the credit card loans are disbursed quiet quickly.

Reasons to Avail Credit Card Loans

Heavy Purchases

The credit card loan comes with an option of EMI for purchases over a certain amount. So it provides you the option to buy the desired product and then pay later over a period of time.

Immediate Cash

The credit card loan is an option to get instant cash because you don’t have to wait for the documentation and approval unlike personal loan. It is more suitable from cash withdrawal on credit card as the charges are higher for that. I.e. HDFC bank charges 2.5% for the cash withdrawal on credit card while the rate of interest on credit card loan is 1.25%.

Key Points

Maximum Amount

The amount allowed as credit card loan varies from bank to bank; the bank can allow upto your credit limit or even beyond that. Generally it is between Rs. 20,000 to Rs. 5 Lacs.

Strict Eligibility Criteria

Being an unsecured loan the credit card loan issuers are quite strict regarding their offering. The cardholder should have a commendable credit history and a good purchase and repayment pattern to be able to apply for a loan on credit card.

Zero Documentation

The credit card loan do not require any further documentation if you have a pre-approved limit.

Credit Card Loan Offers

Bank/FIMaximum AmountInterest RateTenureProcessing Charges
HDFC BankUpto Rs. 5 Lacs1.25% per monthUpto 48 monthsRs. 500 – Rs. 750
ICICI BankUpto Rs. 10 Lacs13% to 15% per annumUpto 60 monthsUpto 2.25% of the advance amount
YES BankRs. 15,000 to Rs. 2 LacsUpto 24 months
SBIUpto 75% of cash limit2.45% per monthUpto 36 monthsRs. 499 – Rs. 3000
HSBC Bank12.99% to 21% per annumUpto 24 months2% of the advance amount
Min. 100

HDFC Bank Credit Card Loans

Credit Card LoanApplicable Interest Rates
HDFC Bank Insta Loans on Credit Cards11.92% per annum
HDFC Bank Insta Jumbo Loans on Credit Cards11.92% per annum
Cash Withdrawals on HDFC Credit Cards

HDFC Bank offers Insta Loans on Credit Cards where you can avail pre-approved personal loan instantly on your existing HDFC Credit Cards. Insta Loans are offered against the credit limit available on your existing HDFC Card at the time of loan application; Hence, the loan amount varies from card to card and depends upon your credit card history. You can avail the funds instantly in your HDFC Saving Account or collect a demand draft from the bank drawn in your name.Currently, HDFC Bank levies an interest rate equals to 11.92% per annum for Insta Loan on HDFC Credit Cards.

HDFC Bank offers you to avail Insta Jumbo Loans on your existing HDFC Credit Cards, where you can avail funds irrespective of your credit card limit. It means you can avail funds instantly on your existing HDFC credit card where the loan amount can be higher than the current credit limit available on your credit card. HDFC Bank levies an annual interest rate equals to 11.92% for Insta Jumbo Loan availed on HDFC Credit Cards.

SBI Credit Card Loans

Credit Card LoanApplicable Interest Rates
SBI Card Encash12.7% – 29% per annum
SBI Easy Money2.45% per month
Cash Withdrawal on SBI Cards3.35% per month (40.2% per annum)
SBI Flexipay11% to 22% per annum

If you want to avail loan on sbi cards for a longer period of time, then options like SBI Card Encash, Cash Withdrawal at ATMs and Flexipay are best suitable ones. Otherwise, SBI Easy Money is the best option for short term advances.

However, it is important to know a cardholder must have a good repayment track with the bank in order to avail SBI Card Encash facility. The cardholder can avail funds on annual interest rate ranging between 12.70% to 29% for a tenure ranging from 12 months to as long as 36 months. With Encash, an eligible cardholder can avail advance from minimum Rs. 10,000 to upto as high as equal to the credit card limit and sometimes above, with a one time processing fee equal to 2% of the advance amount subject to range from Rs. 499 to upto Rs. 3000.

As for the SBI Easy Money is concerned, it is a good option for you if you are looking to avail funds for a maximum period of 45 days only. With Easy Money, an eligible cardholder can take advance from minimum Rs. 5000 to as high as equal to 75% of the credit card limit. The cardholder has to pay an interest of 2.45% per month on the advance amount along with a one time processing fee of minimum Rs. 149 to as high as 1.5% of the advance amount.

Whereas in case of flexipay facility, the cardholder can access funds from a minimum of Rs. 2500 to as high as available credit limit with an annual interest rate ranging between 11% to 22% for a tenure as long as 36 months. On the other hand, cash withdrawal on SBI credit card is the most costly method to avail funds, costing interest rate as high as 40.20% per annum while the maximum funds a cardholder can access in a day is Rs. 12,000 to Rs. 15,000, depending upon what sbi credit card one holds.

Credit Card Loan Eligibility Criteria

  • You need to have a credit card at first instance and needs to have a pre-approved limit.
  • One must have a very good credit history and a good borrowing & repayment pattern in order to be eligible for a credit card loan.
  • The minimum amount mostly starts from 2,000 and the maximum borrowing can go upto Rs. 10 Lacs.

You will get call from the bank if you are pre-approved for a credit card loan. You can visit on the bank’s website at any point of time to get the loan or call the toll free numbers to talk to the bank’s representative.

How to Apply for Credit Card Loans?

You will get a call from the bank if you are pre-approved for a credit card loan. You can visit on the bank’s website at any point of time to get the loan or call the toll free numbers to talk to the bank’s representative.

Difference between Credit Card Loans and Personal Loan

For a personal loan you have to visit the branch with documents and in case of credit card loan the whole process is documentation free.

The rate of interest also differs as personal loan interest rate ranges between 11% to 26% per annum and credit card loan interest rate ranges between 13% to 32%. For credit card loan a credit card is must while for the personal it’s not.

20 Benefits of a Credit Card

Credit cards are like a necessity these days. A lot of people wonder whether they should be using it or not. Many people consider credit cards as a menace because it leads to overspending and it works in the opposite direction of the saving model.

But, we urge these people to reconsider their mind, as they might not be aware of some of the amazing advantages that credit card can offer.

A credit card can actually save money for you, get you insured and even provide security. Apart from this, you can get some free perks too. Let’s see, how credit cards can be highly beneficial for the user.

Savings

Rewards and Savings

Consumers can save a great deal of money through Credit card via various reward plans and cash back offer, but only if they make purchases through those cards. For example:-

  • Many cards offer 5x to 10x rewards points on shopping from various groceries and lifestyle stores or even on online shopping too like SBI simply click credit card. It offers 5X reward points on normal spends and 10X reward points on online spending. Moneyback credit card from HDFC bank offers cash back on the rewards points as well. The reward points earned through your daily shopping course can be utilised by you for further shopping.
  • The credit cards reward mechanism enables the user to save while spending. Every reward points you earn has a monetary value from a minimum of Rs. 0.10 paise to as high as upto Rs.1 that can be redeemed, So it’s quite easy method of saving.

Perks and the Benefits

There are so many complimentary things you can avail with the credit cards:-

  • You can avail complimentary lounge access on most of the premier cards as well as on some other cards. There are also some credit cards specifically giving the lounge perks. HDFC Visa Signature CardSBI Card Prime and Axis Bank Privilege Credit Card are some of the cards you can check for the complimentary lounge access benefits.
  • Credit card also come with the complimentary Golf benefits, which you can avail on any of the Golf Course associated or partnered with the card issuing bank or company.
  • Number of credit cards offers you the free air miles on your flights. So anytime you travel anywhere through air mode you should have any one of the below cards in the pocket to avail the air miles benefits.

Discounts

There are numerous discount offers in the market for credit card holders. Be it the online shopping or any other premier store shopping, you can simply enjoy better discounts offers through credit card rather than a debit card or cash.

  • One of the prime discounts available is on Dining. Many of the credit cards offers Dining discounts on a big chain of participating restaurants with 15% – 25% discount. You can check among some of the below cards for their Dining benefits at least once.

Security

Unlike other modes of payments like a Debit card, credit cards are highly secured financial device. You may not believe but yes credit card do have some amazing safety features:-

Purchase Protection

Purchase protection is a benefit offered by the credit card companies to its user so that if purchased good is damaged or stolen within a specific period of time than a refund for the same is given to the customer. Mostly the purchase protection is for 90 days from the date of purchase. For instance on Diwali you purchased an oven and it suddenly stops working than you should first check your credit card statement and if it has not exceeded 90 days, there is no reason to worry.

Insurance Against Frauds

Your credit card comes insured from the theft and frauds. In case your credit card faces any fraudulent or unauthorised transaction the credit card company will get that paid off from insurance.

Accidental Insurance

Most of the credit cards comes with the accidental insurance coverage. So that in case of accidental death the outstanding amount is waived off and the dependent of card holder gets the claim as well. HDFC bank offers an accidental insurance upto 5 times of the credit limit with a maximum of Rs. 50 Lacs to the card holder if he does 4 transaction of Rs. 100 every month.

Car Rental Insurance

Now if you rent a car and do not want to pay according to the renting companies insurance scheme, you can simply pay through swiping your credit card and you will be entitled for the car rental insurance by the credit card company.

Loans

Credit card with its predefined spending limit, comes with some of more finance options as well:-

Builds Credit History

Maintaining a credit history is very important these days to be able to apply for loans on credit cards. Credit cards are quite helpful in creating the credit history of a consumer. By paying the bills timely, consumers can get into the good books of banks or financial institutions. Customers holding excellent credit history have numerous advantages over the people who have bad credit history or history at all. A good credit score can help in availing loans and banks don’t entertain customers with bad credit history. Hence, credit cards are helpful in building a credit track record.

Even credit card helps you in case you are having a bad credit history, as you can get a secured credit card and then can enhance your credit score consequently by spending and paying on time. One can get a secured credit card even with bad credit history against the fixed deposits or any other form of collateral security.

Interest Free Credit

Most people shy away from credit cards as they do not discover that credit card comes with an interest free credit within the due date of payment. After making a purchase through credit card you only needs to pay the interest when the due date of payment is crossed.

For example, if you purchase a mobile through the credit card and the due date of the payment of your credit card is after 25 days, then you are enjoying an interest free credit for those 25 days. If you make full payment on the due date you would end paying no interest at all.

Balance Transfer Facility

With balance transfer facility on credit cards you can easily move your existing high-interest balances to a new account to save money. Users might have to pay a lower interest rate or 0% interest rate. This further helps in clearing debt faster and even save money. You can also convert the transferred amount in EMI and pay off that in instalments.

Cash Withdrawal Limit

Most of the credit companies provide cash withdrawal facility on credit cards. So that you can withdraw a certain part of your credit card limit in case of any emergency cash requirement situation. These withdrawals can be made in any part of the world and banks may charge certain interest charges. Most of the banks charges around 3% per month on an average for this benefit and maximum cash withdrawal limit can be 25% – 40% of your credit card.

Pre-Approved Loan on Credit Card

Being a credit card owner comes with a lot of advantages. Credit card companies offers pre-approved loan on the basis of your credit card payment history. This loan can be used for urgent purposes and customer does not even have to go through the tedious documentation process. These loan are also cheaper than the usual personal loans by the banks and requires lesser time for the disbursal.

EMI Facility

Credit card comes with the benefit of converting your big purchases into easy EMIs. This can help you a lot as you don’t need to run for a loan to purchase anything. You can make the spending through your credit card and convert the amount into easy EMIs.

Other Benefits

Subscription Benefits

Credit card enables you to get subscription on many of the paid online portals, as most of these portals requests payments only through the credit card. So what your debit card can not do is simply done by your credit card.

Cheaper Foreign Currency Conversion

In case you are abroad, your credit card with the free currency conversion facility can actually make it too smooth to have the required currency in your pocket. Some of the cards offers amazing offers on foreign currency conversions. You can check some of these cards for the foreign transaction purpose. Although they come with heavy annual fee but still it is the most comfortable method.

Benefits on Business Credit Cards

The corporates or even the new start ups looks for the Business credit cards as they are a trustworthy source of making official payments along with enjoying some good benefits on them as well.

High Credit Limit

Business cards usually have a higher limit and allows some extra expenses to be made through them easily. The business usually requires more spending rather than the individuals do. It allows sometimes small business to even finance their small working capital needs also. So the credit car could be a source of urgent capital finance too.

Separate Credit History

Business cards are usually in the name of concerned company or business, so they do not have an impact on the owners credit history, Although they can affect the credit score of the business in a positive direction if the payments are being made timely.Its good for both as business and individual as the credit stories of both remain separate from each other.

Controlled Expenses

Credit card allows the business to control the petty cash expenses made by the employees in day to day affairs like a lunch meeting with the client or a farewell party of retiring employee. All these expenses, If made through credit card goes into accounts book through monthly statement.

Business Perks

Business Credit card comes with exclusive business perks as the credit card companies allows various discounts and perks to the corporate card holders. With SBI Platinum corporate credit card one can make payment on any of 3,25,000 outlets spread across the country.

Interest Free Period upto 50 Days

The credit card companies offers upto 50 days of interest free credit to the corporates, and offers a choice of choosing two EMI dates as well.

Conclusion

So the credit card has as much benefits as we could make out from them. A credit card could be a simple payment tool, insurer, lender anything we want. The benefits are worthy to reconsider your thoughts of not having a credit card. Yes, it have that annual fee, joining fee and some other charges. But, then if you are smart enough to know how to maximise the benefits from your card, you can easily make for these fee and charges.

Tax Saving Investments

There are many provisions under various sections  of the Income Tax Act such as section 24, 80C,80D,80E, 80EE, etc. that can help you save from paying lacs of rupees as taxes. Most of these provisions provide for investment options that generate tax-free income.

The income tax laws not only state the formula to calculate your taxable income but also provides for numerous exemptions and deductions that help you keep a major portion of your hard-earned money all for yourself. Various sections of the Income Tax Act, 1961 offer tax deductions over several investments made by the tax-payers. Based upon these legislations, there is a broad variety of tax saving options available to you, that not only help you save taxes but also generate tax free income. In this article, we have provided a detailed description of plethora of such investment options that will save you from giving away a major portion of your income in taxes.

Deduction under section 24 (Home Loans)

When it comes to investment, the first thing that comes into an individual’s mind is property. Investing in a residential property by borrowing from financial institutions is a very good tax saving option. There are a number of home loan options available in the market for raising the requisite capital.

Section 24 of the Income Tax Act offers a yearly tax deduction on the interest payments made towards housing loan. In case of a self-occupied property, the deduction offered is capped at Rs. 2 lakhs and claims can be made only if the house is constructed completely within five years of borrowing the loan. For a property given out on rent, there is no such compulsion of completing the construction. In addition to this, there is also no cap on the amount claimed as a tax deduction on interest payment in case of rented-out properties. Total interest paid on the home loan on that residential property can be deducted.

Deduction under Section 80C

This section is the favourite of all tax-payers. It enlists a range of investments over which an individual can claim tax deductions. It is to be noted here that the maximum deduction that can be claimed in one financial year over all the options listed under section 80C is capped at Rs.1.5 lakhs. If you have claimed Rs. 1.5 lakhs as deduction over any of the options under section 80C in a financial year no further claims can be made under any circumstances in that particular year. The deductions offered under the section include:

Public Provident Fund

Public Provident Fund or PPF has been the favourite investment avenue for individual tax-payers. Backed by the government, a PPF account can be opened at a bank-branch or post-office, at any age by an individual in his own name or for a minor of whom he is a legal guardian.

A PPF account can be transferred from bank to post-office or vice-versa. It is opened for a period of 15 years and the term can be extended indefinitely, but for five years at a time. In order to keep the account active, a minimum of Rs. 500 is to be deposited every year whereas the maximum amount that can be deposited in one financial year is capped at Rs. 1.5 lakhs.

The interest rate is revised by the Ministry of Finance after every quarter and is currently placed at 8.5% per annum. The interest earned at PPF is exempted from any kind of taxation.

A PPF account can be terminated prematurely only under two circumstances. If an account holder or any of his family members is suffering from a life-threatening disease, then account can be withdrawn on providing a supporting medical evidence. The account can also be terminated prematurely for the higher education of a minor account holder. Under both these circumstances, one percent will be deducted from the applicable interest rate for the account at the time of withdrawal.

Employees’ Provident Fund

Just like PPF, an Employees’ Provident Fund or EPF along with helping a salaried individual to save tax by means of involuntary savings also serves as a source of tax-free income. It is mandatory for the employee to contribute about 12 percent of his salary towards his EPF account. The employer also makes an equal contribution, however, only 3.67% of this goes into the EPF account. The remaining 8.33% of the employer’s contribution is directed into the Employees’ Pension Scheme.

An employee is permitted to increase his contribution to the EPF and can even contribute 100% of his basic salary plus dearness allowance, it then becomes the Voluntary Provident Fund or VPF.

Only the employee’s contributions towards the EPF account is entitled to enjoy yearly tax benefits of up to Rs. 1.5 lakhs under section 80C. The employer’s contributions do not enjoy these benefits. The interest rate for EPF is currently 8.55% and the amount earned as interest is exempted from any taxation given that the employee remains under employment for five or more consecutive years.

One can withdraw from EPF either completely or partially. The partial withdrawal can be made during certain circumstances such as marriage of self or of a family member, higher education, purchase of property, construction and renovation of house, repayment of home loan and retirement. The complete withdrawal can be made either on retirement or if the account holder has been unemployed for more than two months. A certification from a gazetted officer is required in the case a person claims to be unemployed for 2 months.

Equity Linked Savings Scheme

Equity-linked savings schemes or ELSS can be understood as a tax-saving mutual fund scheme. It is offered at every mutual fund house. However, unlike mutual funds, the dividend income for ELSS comes from profit generated by the company and not from NAV. Thus, the returns are dependent on the equity market and are therefore not fixed. The investments made in ELSS are eligible for annual tax exemptions mentioned under section 80C.

The lock-in period for funds invested in ELSS is three years and the amount cannot be withdrawn before completion of three years. The funds received on completion of three years are classified as long term capital gains and are subject to be taxed at a rate of 10%. However, if the gains are less than Rs. 1 lakhs then they are exempted from taxation.

UNIT Linked Insurance Plan

Unit Linked Insurance Plan or ULIP is an integrated plan that offers investment options for capital markets alongside life insurance cover. It is a fusion of protection and savings. The investment vehicle is similar to a mutual fund in both structure and function.

ULIP services are available at various banks and insurance companies such as HDFC, Kotak Life, Aegon Life, ICICI, SBI Life, PNB MetLife, IDBI federal and IndiaFirst. An individual seeking ULIP is required to pay premiums in monthly, annual or semi-annual instalments. A beneficiary need to specify the investment options where his funds are to be directed in proportion.

ULIP can last for a period of 15 or 20 years but the lock-in period is only five years. The beneficiary can leave the plan any time after five years. The funds received on quitting the plan are totally tax-free.

Life Insurance Plans

Insurance plans are one of the favourite tax saving options in India. A beneficiary seeking an insurance is required to pay a fixed annual premium up to a specific period mentioned under the insurance plan. The premium amount depends upon the age and the time duration of the plan coverage.

Under the section 80C of the Income Tax Act, life insurance plans enjoy an annual tax exemption of 10% of the premium paid. The maximum amount of exemption amount is fixated at Rs. 1.5 lakhs. The funds received on the maturity of an insurance plan are completely exempt from taxation.

Repayment of Principal on Home Loans

While section 24 deals with tax benefits on interest payment, the repayment of principal amount falls under section 80 C according to which a borrower can enjoy yearly tax deduction of up to Rs. 1.5 lakhs. However, there is one condition for availing these benefits that the house must undergo complete construction within five years of taking the loan.

Sukanya Samriddhi Yojana

Launched under the banner of “Beti Bachao, Beti Padhao” campaign, Sukanya Samriddhi Yojana (SSY) is aimed at benefiting the girl child. Under this scheme, small deposit accounts can be opened at any bank branch or post-office for a girl who is under the age of 10 years with a deposition of at least Rs. 250.

A family can open a maximum of two SSY accounts, one account for each girl child. The amount that can be deposited in a SSY account every year ranges between Rs. 250 and Rs. 1.5 lakhs. Such depositions enjoy enjoy tax deductions under section 80 C.

The rate of interest offered for an SSY account is currently 8.5%. It revised by the Government of India every quarter.

A SSY account can continue for a maximum of21 years and gets dissolved on the marriage of the girl. Partial withdrawal of 50% can be made for the higher education of a girl child after she reaches an age of 18 years. All the returns from an SSY account are exempted from any kind of taxation.

National Saving Certificate

A National Saving Certificate (NSC) is a low-risk savings bond and is available at post-offices. A person can purchase a NSC in his own name, for a minor or jointly with another adult. NSCs are currently available for two fixed maturity periods, for five years and for ten years. There is no limit on how many NSCs can be bought but only a maximum of Rs. 1.5 lakhs invested for NSC are eligible as a tax deduction in one year.

A NSC is only available for individual residents of the country. Hindu undivided Families and NRIs cannot purchase the. However, if a person holding a NSC moves abroad and becomes an NRI, he is allowed to hold the NSC till the time of maturity.

The interest rate on NSC is revised after every six months by the Government of India and is currently fixated at 8% per annum. The interest earned every year is added back to the original investment and therefore, deductions can also be claimed over the interest amount earned in that year as it is compounded to the investment amount.

Tuition Fees

Along with other investments mentioned under section 80C an individual can also avail tax deductions for the tuition fees that he pays for the education of his children provided that the overall limit of Rs. 1.5 lakhs is not breached. It is to be noted here that an individual can claim deductions only for the education of his children and not for anybody else’s education. Also, a single tax-payer can avail deductions for education of only two children.

Tax Saving Fixed Deposits

Tax saving fixed deposits are similar to regular fixed deposits with one difference that they come with a lock-in period of five years. The amount contributed towards these deposits is eligible for claiming annual tax deduction of up to Rs. 1.5 lakhs under section 80C. These deposits can only be made by individual resident tax-payers at any bank with an investment of at least Rs. 1,000. The interest rate offered over fixed deposits differs from bank-to-bank. The interest earned is liable to be taxed.

Deduction under section 80CCC AND 80CCD (Pension Funds)

Section 80CCC provides for extension of the tax deduction of Rs. 1.5 lakhs annually under section 80C to include pension funds. Any amount contributed by an individual towards a pension fund is eligible for claiming annual tax deduction which amounts to 10% of his basic salary or 20% of his gross total income or Rs. 1.5 lakhs, whichever is lesser.

The accounts opened under the National Pension Scheme(NPS) and Atal Pension Yojana (APY) also enjoy tax benefits. According to section 80CCD, an individual can claim a maximum of Rs. 50,000 as deduction from taxes in a year for the amount he has deposited in NPS and APY accounts.

Furthermore, section 80CCD also states that an employer contributing towards employee’s NPS account can claim 10% of his basic salary as tax deduction.

Deduction under section 80D (Medical Insurance)

Section 80D talks about tax benefits available over premium towards medical insurance. A deduction of not more than Rs. 25,000 is applicable for premium payment on medical insurance for self, spouse or dependent children. For medical insurance of parents (under the age of 60 years), an additional deduction of up to Rs. 25,000 can be claimed. If the parents are above the age of 60 years, the additional deduction can amount up to Rs. 50,000. In case, a tax paying individual as well as his parents are older than 60 years, then the deduction can amount to as high as Rs. 1 lakh.

Deduction under Section 80E (Education Loan)

This section deals with tax deduction that can be availed over the interest paid towards an educational loan starting from the time of beginning of repayment. There is no ceiling over the amount of deduction.The deduction can be availed for a maximum time period of eight years and the benefits end as soon as the loan gets repaid completely.

Deduction under Section 80EE (First Time Home Buyer)

Alongside deductions mentioned under section 24 and section 80C, a person who is buying a house for the first time by means of taking a loan is offered with some additional benefits. First time buyers who took a loan between 1st April 2016 to 31st March 2017 are entitled for an additional annual tax deduction amounting up to Rs. 50,000 till the complete repayment of the loan is made.

Deduction under section 80G

Section 80G provides for tax deduction on donations made towards charitable organizations. 50% or 100% of the donation amount can be claimed as a tax deduction based upon the kind of charitable organisation towards which donation was made.

Deduction under section 80TTA (Interest on Savings Account)

As per section 80TTA, the interest income of up to Rs. 10,000 from savings account exempted from taxation. It is available for both individuals as well as Hindu Undivided Families. 

Takeaway

There is a plethora of legitimate investment options available in the financial market that help you save taxes in a lawful manner. Some of these sources, as has been discussed in the article, can also serve as a source of tax-free income generation.

CIBIL Score

CIBIL is the abbreviated form of Credit Information Bureau (India) Limited, a company that maintains the credit information of all the persons who have even once enjoyed credit facility, from any bank or any financial organisation in India. This company stores total credit data of each person who has even once taken a loan from any bank or financial institution or has taken a credit card from any company.

They fetch complete data including the total number of loans taken by a person from banks, NBFC and other financial institutions, with details of amounts of each loan and number of credit cards taken along with the assigned credit limits. Above all these, they record their repayment behaviour. From such behaviour and history of a person, these credit companies design a credit score for each of that person. Thus, credit score denotes the credit worthiness of that person. Better the history better the score. Therefore higher credit score, the higher the credit worthiness of that person. Thus credit score means a numerical figure that reflects the credit rating of a person, as derived from the analysis of the credit data regarding that person as available on records, expressing the credit worthiness of that individual. This credit score as reflecting on the records of Credit information bureau (India) limited is termed as CIBIL score.

This practice of rating creditworthiness of a person is widely followed the world over. Different countries have their own different credit recording agencies. Those credit companies fetch credit data from different financial organisations. They provide a credit score for each person of their countries. In the USA this credit scoring is being used as a regular practice, even by landlords before giving accommodation on rent to a tenant.

The Credit Information Bureau (India) Limited (CIBIL) was the first company to be licensed by the Reserve Bank of India. It is functioning as a Credit Information Company since January 2001. Later on, in the year 2010, the Reserve Bank of India licensed three more companies to operate so as to break the monopoly of CIBIL. Although all the four credit information companies have developed their individual credit scores, the most popular among them is credit score as provided by CIBIL company. A CIBIL score is a 3 digit number that has been marked in the range of 300 – 900. Individuals who have no credit history, are given a score of -1. If the credit history of an individual is less than a period of six months, the score will be showing 0. CIBIL credit score takes time to build up and usually it takes between two to three years or even more of credit usage to obtain a satisfactory credit score. When you apply for a credit card or a loan, lenders like banks and non banking finance companies check your CIBIL score to see whether you have the capability to repay the credit. Generally a CIBIL score of greater than 750, is considered satisfactory.

The banks, finance companies and credit card companies, who are to sanction some loan to a person, so before giving such credit facility they want to assure themselves about the credit worthiness of their prospective borrowers so as to avoid any bad credit. That can only be derived from past credit behaviour of that person and this past repayment behaviour is provided by such companies.  These lending institutions employ this CIBIL score to evaluate the repaying behaviour of an individual before lending any money to such consumer so as to save their organisation from a bad debt. Such lenders through this score, rate the repayment capacity of a consumer. This rating is used to determine the amount of the loan that could be safely provided to that individual. Lenders as a practice assign rates of interest to be charged from a person, depending upon the bracket person’s score falls into. Lesser credit score means higher rate of interest, lower credit limit. An individual with a lower CIBIL score can even be refused the loan. This scoring is used at the stage of sanctioning of a loan or a credit card.

CIBIL scoring is not limited to banks. Many other organisations, such as insurance companies, mobile phone companies and government departments employ the same techniques. Digital finance companies such as online lenders also use different data sources to rate the creditworthiness of borrowers, before sanctioning such facilities to them.

How is the CIBIL Score calculated?

Your CIBIL score is the net result of following factors. Although CIBIL does not give any clue about their methods employed to construct scoring but they are generally believed to follow the following pattern:

Repayment Behaviour:

The most weightage in deciding your CIBIL score is given to your repayment behaviour. Defaulting on your EMIs or even making payments late, negatively impacts your score. (App 35% weightage)

High Credit Component:

A high credit component in your financial mix  indicates a rising debt burden in your financial structure and leaves a negative impact your score. ( App 20% weightage)

Length of History:

In case a person has a lengthy credit history, that helps a more accurate analysis of his behaviour so gives more confidence to your lender. Hence is given good weightage.  (Approx. 15% weightage)

New Loans:

Similarly, less of new loans in your recent past indicate your better financial health so increase your score. (App 10% weightage)

 Credit Composition:

A right mix of secured (Home loan and car loan) and unsecured loans (credit cards and personal loans) means less of unsecured loans shows your more creditworthiness. ( Approx 10% weightage)

Repeated Applications:

Your repeated applications for borrowing money from different banks or financial institutions, indicates your dire deficiency of funds, so signals a rise in your debt burden in future. Thus your frequent applications  for loans leaves a negative impact on your score. (10%)

Percentage of weightage in total CIBIL Score Chart:

Credit Score Weightage  Chart
CIBIL Score Weightage Percentage Chart

How can you achieve a higher CIBIL score?

Your CIBIL score is based on your above mentioned factors.. What you do today can help you build a stronger and healthier credit footprint. Here are a few quick tips to help you improve your score:

  • Always pay your dues on time. Late payments impart you a lower score.
  • Keep your credit balances low. Be prudent, avoid too much credit.
  • Avoid too much dependence upon the loans. Even if you have to take, try to delay as much as possible so as to reduce the frequency of loans.
  • Maintain a healthy credit mix of secured (like home loan and auto loan) and unsecured loans (like personal loans and credit cards) – too many unsecured loans may be viewed negatively.
  • Apply for new credit in moderation. This shows that you are not continuously seeking excessive credit.
  • Monitor your co-signed, guaranteed and joint accounts monthly. Remember that you are held equally liable for missed payments in co-signed, guaranteed or jointly held accounts, and your joint holder’s (or the guaranteed individual’s) negligence could affect your ability to access credit when you need it.
  • Review your credit history frequently throughout the year. Monitor your CIBIL Score and Report regularly to avoid unpleasant surprises (like a rejected loan application). Checking your report regularly will also alert you to possible inaccuracies, if any. In case you spot any discrepancy, you can log a dispute on the CIBIL website or request the lender to report the correction to CIBIL.
  • Even frequent applications for new loans, badly affects your CIBIL score.
  • Build a strong credit age.
  • Clear your bad accounts if you have any.
  • To improve your CIBIL score take short term loans and repay them responsibly without any delay or default. Such clean repayment behaviour would help you, raise your CIBIL score.

Today’s economy is a credit based economy. One is successful if one has easy access to credit. CIBIL score impacts your future access to credit means it can so much impact your life that it can make or break it. However, improving one’s CIBIL score is a marathon. You have to be inherently responsible and ethical. One great lesson is either you do not take a loan but in case you do, you should repay responsibility otherwise it is going to hurt you badly and you will have to bear the repercussions through your whole life. As you look to achieve your planned financial goals or in case of an emergency, you may need access to credit. Make sure you monitor your CIBIL score and credit profile regularly to ensure you are credit-ready. Start working towards improving your score today.