Credit cards can be your best friend in times of financial crisis, but only if you pick the right one for yourself. There are various banking and non-banking financial institutions offering credit cards to individuals and businesses in need. A credit card is one of the best ways to obtain an easy credit line that can be leveraged to meet immediate expenses. However, failing to make your credit card bill payment on a timely basis can hamper your credit score, impacting your future credibility. You must be mindful of the type of credit card that you are choosing and find out if it’s a good fit for your fiscal needs or not. Let’s delve deeper to learn about the different types of credit cards that you can choose.
1. Reward credit cards
How about a credit card that rewards you for your purchases and other expenses? Well, reward credit cards are designed for users who like to shop using credit cards and earn benefits on their expenses. Reward credit cards are usually categorised into three categories cash back, points, and travel perks. Most people prefer using the cashback credit card since it offers them more flexibility to use the money earned through cashback.
Many credit card users also like to use credit cards that offer reward points that can be redeemed for cash or coupons. Travel reward cards are preferred by those who have a frequent travel schedule; this allows them to make the most of their travel plans. Using a travel credit card, one can offer exciting offers such as free flight tickets, hotel stays, meals, etc.
2. Balance transfer credit cards
The balance transfer credit cards allow users to transfer balances easily and charge a relatively lower fee for these transfers. Most balance credit cards offer a low introductory rate on balance transfers for a certain period. Balance transfer cards can be leveraged to save money on high-interest balances on a different credit card. You can easily transfer the balance on this card and pay a significantly lower interest fee.
Balance transfer interest rates can start from as low as zero percent. However, these cards might charge a nominal fee for each transfer. To choose the best balance transfer credit card, you should look out for the promotional rate and promotional period. The lower these metrics are, the better your card is.
3. Student credit cards
Credit cards were primarily designed for people who had some established credit history. However, recognising the needs and purchasing habits of the new generations, many financial institutions have started offering student credit cards. Student credit cards often offer additional perks for students like rewards and low-interest rates on balance transfers.
The best credit card in India for students requires the applicant to enrol at an accredited university. This is done to weed out unreliable applicants who might exploit benefits offered to users with no credit history. Most student credit cards also have an age criterion that requires the applicant to be over 18 years of age. A student credit card also allows individuals to build good credit history at an early age that they can leverage later to avail of bigger loans when needed.
4. Secured credit cards
Secured credit cards are designed to offer credit to individuals with no or poor credit history. Secured credit cards require individuals to deposit a certain security amount which can be placed on a card. The credit line offered to the applicant is mostly equivalent to that of the security deposit for the card. A secured credit card user is also required to make punctual repayments of the borrowed amount. This will help them improve and build their credit score, which can help them get a regular credit card in the future without depositing any security.
5. Business credit cards
As the name suggests, business credit cards are specially designed for business endeavours. To run a business smoothly, you need to have good cash flow, and an additional line of credit can help you finance emergency purchases. It also allows business owners to manage their business and personal expenses separately. Before issuing business credit cards, credit companies evaluate the credibility of the business owners and the business.
In a nutshell
These were some of the commonly available types of credit cards available in the market that one can choose from depending on their needs and eligibility criteria. It is highly recommended to read all the terms and conditions of a credit card before opting for one. Before choosing your credit card, the most critical factors you must consider include joining bonuses, finance charges, annual fees, late payment charges, rate of interest, cash advance fees, foreign currency markup fees, GST, etc. You can also compare the benefits and limitations of each card and pick the best credit card in India.
