What are the Various Types of Credit Card?

When it comes to spending money, the more options that you have, the better it is for your pocket. Credit cards have undoubtedly made our lives easier and much simpler. However, they have added an almost equal amount of risk to our financial statuses as well. To balance the benefits that a credit card offers and the risk of overspending, it is important to get a card that fulfills exactly what you need. 

And to help you make the right choice, banks and financial institutions offer the option of choosing your credit card depending upon your needs so that you don’t overspend and fall prey to debt traps. When you decide to buy yourself a credit card, you may have to choose one among the following types of credit card-

  1. Basic Credit Card- These credit cards are ideal for beginners. If you are new, and only wish to try how credit cards work, then you can go for a basic credit card. With this card, you will get a small limit depending on your monthly income, such that you don’t fall into any sort of debt trap as you use your new credit card. It must be noted that basic credit cards do not offer any additional benefits on the amount spent.
  2. Virtual/Digital Credit Card– A virtual credit card is an add-on VISA credit card which is issued on a user’s primary credit card. Users can only use the virtual card online, meaning that all the credit card details such as the card number, expiry date, CVV, etc. are visible online. Paytm offers a co-branded digital credit card in collaboration with HDFC bank.
  3. Zero Annual Fee credit card– These credit cards are the ones that do not charge any annual fee. This card is suitable for individuals who do not make much use of their credit cards and need very few additional benefits on their credit cards.
  4. Travel credit card– These cards are beneficial for travelers. Every time that you use a travel credit card to make payment for airline bookings, hotel bookings, etc., you earn rewards points. These points can further be redeemed to make new bookings for travel.
  5. Fuel credit card– These credit cards are majorly beneficial for transporters. Fuel credit cards help you avail of fuel surcharge waivers and save on your fuel expenses by reducing the daily transportation costs. You can also earn reward points and use them to make substantial savings on your fuel expenses all through the year.
  6. Shopping credit card– Shopping credit cards let you shop at various stores or e-commerce websites, and offer you discounts in the form of cashback, reward points, etc. Using this card, you can get various cashback, discounted vouchers, etc. on your future purchases.
  7. Reward credit card– Reward credit cards offer huge reward points on all your spending. These cards offer accelerated reward points on certain specific transactions. The bonus points hence earned can be used to get discounts on next purchases. You can also redeem these bonus points to reduce your monthly credit card bills.
  8. Secured credit card– Secured credit cards allow you to benefit from attractive interest rates against fixed deposits. Using this type of credit card will help you increase your credit score if used carefully.
  9. Low-interest credit card– Low-interest credit cards are the ones that offer a comparatively lower interest rate than the other cards of a similar category.
  10. Balance transfer credit card– A balance transfer credit card is one that allows you to transfer balance at a low interest rate for a specific period of time.
  11. Cashback credit card– Cashback credit cards are the ones that offer a specific amount of cashback on the purchases made using the credit card. However, there may be certain conditions on the type of transactions that are eligible for a cashback.
  12. Entertainment credit card– Entertainment credit cards are the ones that offer discounts and deals only on purchases that are related to entertainment such as booking movie or concert tickets, amusement park tickets, etc.
  13. Lifestyle credit card– Lifestyle credit cards are suitable for the ones who make spends on lifestyle activities such as premier screenings, night clubs, fashion shows, etc.
  14. Co-branded credit card– Co-branded credit cards are the ones that are offered as a result of a tie-up between the card’s issuing bank and a particular brand. You get special discounts on the purchases made on the specific brand using a co-branded credit card.
  15. Business credit card– Business credit cards are ideal for businessmen. These cards help in ensuring that the business and personal transactions are separate. It is important to note that to get a business credit card, you must have a high credit score.
  16. Prepaid credit card– Prepaid credit cards are the ones that need you to have a prepaid balance on your credit card before you use it. The amount for all the transactions hence made, will be deducted from the credit card’s balance. Also, there is no additional charge or criteria for the minimum payment on this type of credit card.
  17. Student credit card– Student credit cards are meant for college students. Having a low interest rate, these credit cards help students manage their finances and credit better. The applicant must be a college student, above 18 years of age to be eligible for this type of credit card.
  18. Premium credit card– Premium credit cards are meant for only a few people. These cards provide access to a few golf clubs, airport lounges, concierge services, and insurance, etc. Upon proper usage, these cards offer coupons for complimentary travel and/or hotel accommodations. It must be noted that there is a strict eligibility criterion for a premium credit card.
Read More: Credit Card Fraud: All you Need to Know

Factors to be Considered Before Buying a Credit Card

Once you have established your needs and identified which types of credit card you wish to purchase, you must now compare among various similar types of credit cards offered by various banks. As you do so, you must consider the following important factors while making the choice-

  • Annual fee– Every credit card has an annual maintenance fee that is applicable for one year. However, there are a few cards that are offered for free, these cards rebate your first year’s annual maintenance fee
  • Interest on credited amount– If you fail to repay the amount to your bank during the grace period, you will have to pay interest on the credited amount. This interest varies from 1.5% to 3.5% monthly, depending upon bank to bank
  • Additional expenses– Various credit card companies may also levy certain additional expenses that might not be highlighted in the beginning. However, it is important to keep a detailed check on these added expenses before buying a credit card. Such expenses include joining charges, cost of overseas transactions, cash withdrawal interest, fees for overusing the credit limit, fees for late payment, fees for card replacement, surcharges, etc.
  • Special benefits– As you decide on the credit card of your choice, you must also check the additional benefits offered by the credit card company. These benefits may include cashback on first withdrawals or purchases, reward points, discount vouchers on various e-commerce sites or restaurants, etc.

Apply For Credit Card

What is a travel credit card?
A travel credit card is one that is ideal for travelers. Purchases made using this credit card on travel, airline bookings, hotel bookings, etc. will help you earn points and rewards. These rewards can further be redeemed on future purchases made using this type of credit card.
What should I consider before buying a new credit card?
Before buying a new credit card, you must consider a few factors like your needs for buying the credit card, annual fees on your card, additional expenses that may be levied on the credit card, interest rates on the credited amount, special benefits offered by the credit card, etc.
How can I earn reward points using a credit card?
Various types of credit cards offer various benefits. However, almost all the cards offer reward points for making specific purchases. These points can later be redeemed on making more spending using the same credit card in the future.
What are the various types of credit cards?
Depending upon your specific needs, you can choose to buy either of the following types of credit card-
  • Basic credit card
  • Virtual credit card
  • Zero credit card
  • Travel credit card
  • Fuel credit card
  • Shopping credit card
  • Reward credit card
  • Secured credit card
  • Low-interest credit card
  • Balance credit card
  • Cashback credit card
  • Entertainment credit card
  • Lifestyle credit card
  • Co-branded credit card
  • Business credit card
  • Prepaid credit card
  • Student credit card
  • Premium credit card

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