Priya, a young professional in Mumbai who’s ready to get her first credit card, is excited about the idea of accessing credit, earning rewards, and managing her expenses efficiently. But when she starts looking into credit cards, she’s quickly overwhelmed by the variety of options available—travel cards, cashback cards, fuel cards, and more! How does one decide which card suits them best?
Today, we’ll take a look at the different types of credit cards in India, helping people like Priya make informed decisions based on their lifestyle and spending habits.
Whether you’re new to credit cards or looking for an upgrade, understanding the types of credit cards in India can help you pick the one that best matches your needs. Let’s explore these options, using Priya’s story as an example.
1. Cashback Credit Cards
Priya loves online shopping, whether it’s for electronics, groceries, or clothes. She often finds herself browsing e-commerce platforms for deals and discounts. For someone like Priya, a cashback credit card could be a game-changer.
How it works:
Cashback credit cards reward users with a percentage of their spending as cashback, which can be redeemed or used to pay off future bills. For example, if Priya spends ₹10,000 on a card that offers 5% cashback, she would earn ₹500, which can be credited back to her account.
Example: The HDFC Millennia Credit Card is a popular cashback card in India, offering up to 5% cashback on online shopping platforms like Amazon, Flipkart, and more.
Who should use it?
This type of credit card is perfect for frequent shoppers who want to earn back some of what they spend, especially if they make purchases online or on groceries regularly.
2. Travel Credit Cards
Priya’s friend Rohit, on the other hand, is a frequent flyer. He travels for work and leisure, often spending time at airports or booking tickets for both domestic and international trips. For someone like Rohit, a travel credit card offers exciting benefits.
How it works:
Travel credit cards come with perks like air miles, complimentary airport lounge access, discounts on flight bookings, and hotel reservations. Every time Rohit spends on travel-related expenses, he earns points or miles that he can redeem for flight tickets or upgrades.
Example: The Axis Bank Vistara Signature Credit Card offers a complimentary business class ticket and travel insurance along with Club Vistara membership, making it an excellent choice for frequent flyers.
Who should use it?
If you frequently travel by air, enjoy luxury airport lounge access, and want to accumulate air miles for free flights, a travel credit card is a great choice.
3. Rewards Credit Cards
Back to Priya, who, along with online shopping, spends on dining out, movies, and occasional weekend getaways. She’s interested in a credit card that offers rewards for her overall spending. In this case, a rewards credit card fits the bill.
How it works:
Rewards credit cards give users points for every rupee spent, which can later be redeemed for gifts, vouchers, or other benefits. The more Priya spends, the more reward points she accumulates, which she can use for things like movie tickets, gift vouchers, or even travel bookings.
Example: The SBI SimplyCLICK Credit Card is a popular option that rewards online shoppers with bonus points for shopping on partner platforms like Amazon, Cleartrip, and BookMyShow.
Who should use it?
Rewards credit cards are ideal for those who want to maximize their spending on daily expenses, entertainment, and lifestyle purchases, earning rewards that can be used for future shopping or travel.
Also Read: How to maximize credit card rewards
4. Fuel Credit Cards
Priya’s brother Arjun owns a car and drives to work every day. With the rising cost of fuel, he’s looking for ways to save on his fuel expenses. A fuel credit card would be an excellent option for him.
How it works:
Fuel credit cards provide benefits like cashback, discounts, or rewards on fuel purchases. For example, if Arjun regularly fills fuel at partner stations, he could save up to 3-5% on every transaction. Additionally, these cards often waive the fuel surcharge (which is around 1-2.5% per transaction).
Example: The IndianOil Citi Credit Card offers up to 71 litres of free fuel annually based on the cardholder’s fuel spending, along with a waiver of the fuel surcharge.
Who should use it?
If you frequently spend on fuel, whether for personal or business use, a fuel credit card can help you save a significant amount over time.
5. Lifestyle Credit Cards
Priya’s colleague Meera loves luxury brands, gourmet dining, and spa retreats. She enjoys a premium lifestyle and is always looking for exclusive deals on high-end experiences. For someone like Meera, a lifestyle credit card is a great match.
How it works:
Lifestyle credit cards cater to those who enjoy luxury and premium experiences. These cards offer rewards and discounts on dining, shopping at premium brands, exclusive access to events, and more.
Example: The HDFC Regalia Credit Card provides benefits like complimentary airport lounge access, concierge services, and discounts on fine dining, making it ideal for someone with a taste for the finer things in life.
Who should use it?
If you frequently indulge in premium shopping, dining, or travel experiences, a lifestyle credit card offers tailored perks that enhance your overall experience.
6. Business Credit Cards
Priya’s uncle runs a small business in Delhi and often needs to make bulk purchases or manage business expenses. He could benefit from a business credit card, which helps him manage corporate expenses effectively.
How it works:
Business credit cards are designed to meet the needs of business owners or entrepreneurs. They offer higher credit limits, access to business-related discounts, and detailed reporting tools to track expenses.
Example: The HDFC Business MoneyBack Credit Card provides cashbacks on business spends, along with rewards points on every transaction, making it a suitable choice for small business owners.
Who should use it?
If you run a business or manage corporate expenses regularly, a business credit card helps streamline your expenses, offers higher credit limits, and provides valuable rewards.
7. Secured Credit Cards
Lastly, Priya’s cousin Neha, who is a student, wants to build her credit score but doesn’t have a high income yet. For Neha, a secured credit card could be the best option to kickstart her credit journey.
How it works:
Secured credit cards are backed by a fixed deposit (FD) with the bank. The credit limit is typically a percentage of the FD amount. This type of card is ideal for people with no or low credit scores who want to build a healthy credit history.
Example: The SBI Advantage Plus Card is a secured card that helps users build credit while offering perks like reward points and cashbacks.
Who should use it?
If you’re looking to improve your credit score or don’t have a regular source of income, a secured credit card is a safe way to build credit.
Conclusion
Understanding the different types of credit cards in India can help you find the right card that aligns with your lifestyle and financial goals. Whether you’re like Priya, who loves online shopping, or Rohit, who travels frequently, selecting the right credit card can enhance your spending experience and bring meaningful rewards. Choose wisely, and make the most out of your credit card!
FAQs
- What are the different types of credit cards in India?
The different types of credit cards in India include cashback cards, travel cards, rewards cards, fuel cards, lifestyle cards, business cards, and secured credit cards, each catering to different financial needs and spending habits. - Which credit card is best for frequent travellers?
Travel credit cards, like the Axis Bank Vistara Signature Credit Card, offer benefits such as air miles, lounge access, and travel insurance, making them ideal for frequent travellers. - What is a secured credit card, and who should get it?
A secured credit card is backed by a fixed deposit and is great for individuals who want to build or improve their credit score. It’s ideal for students or those without a regular income. - Are there credit cards for people who spend a lot on fuel?
Yes, fuel credit cards, like the IndianOil Citi Credit Card, provide discounts, cashback, and waiver of fuel surcharges, helping regular commuters save on fuel expenses. - How can I choose the best credit card for my needs?
To choose the best credit card, assess your spending patterns and lifestyle. Whether you spend more on travel, shopping, fuel, or dining, there’s a card tailored for your specific needs.
