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What Are Credit Cards? 5 Points To Remember And Its Types

By Author: Reecha Soni
Total Articles: 2

Imagine, you receive your first pay-check, and you are lost on how and where to invest it. Questions like, ‘what if I go into debt?' or ‘How to sort the options?' You require a secured place, and for that, you need to create a treasure box. Banks provide such boxes in the form of salaried, savings and current account facilities. This way new employees can take their first step towards financial planning.

Once the account is in place, you can apply for a debit/credit card to smoothen your financial transactions. However, first-time office goers tend to use credit cards recklessly. The following guide should assist the beginners on how to go about using credit card in India:

Do not hamper credit score: Many times, credit card payment dues affect your credit score. Some other factors that affect your credit score are your accounts duration period, how much money you hold in the account, etc. In the longer run, you do want to purchase a car or a house. If you keep the above factors under check, your credit score will be unaffected and will make it convenient for for you to obtain insurances, loans, etc. smoothly.

Keep track of billing cycle: Just like we mark important birth and anniversary dates on the calendar, mark a day every month for paying your bills as well. This way you can keep aside the necessary amount for the month.

Keep a check on interest rates: Credit cards incur different interest rates for balance transfers, purchases, etc. In case you opened the account recently, you might even have promotional rates. If you know you will not make balance transfers or investments; you do not need to keep up with those rates. However, do check on the changes on the interest rates that can be seen on your billing statement.

Beware of late payment fee: If you do not adhere to minimum payment on your credit card which is 5 per cent of the statement within the stipulated time, be prepared to pay the late payment fee. The payment fee is standardized for credit card in India. These late payments affect your score in turn.

Be responsible: Do not fall into the category of ‘got-to-have-it-now, pay-it-later.’ Try to coordinate your needs and budget.

There are different types of credit cards for every individual. Those are:

Silver credit card: It can be availed by anyone who falls under nominal salary range. The person should have 4-5 years of work experience

Gold credit card: Those who earn higher income can obtain a gold credit card. These people should possess a good credit score.

Classic credit card: These cards come with additional perks such as global acceptance, revolving credit, cash advance, interest-free credit period, reward programs and dedicated customer care service.

Credit cards for women: Certain banks have credit cards specially designed for women. These cards focus on rewards and cashback deals.

Titanium credit cards: This kind of card come with plenty of privileges for its customers. The key benefit is the titanium reward program that includes redemption of air miles and gifts, cashback offers, surcharge waivers, annual fee reversals, vouchers from retail brands, dining benefits, etc.

Platinum credit cards: It is the most popular type of credit card and owned by several users. They offer benefits for shopping, entertainment, dining, etc. They charge a very high fee on the annual joining and renewal.

Rewards credit card: This card offers rewards on every transaction. This way users can earn reward points at retail stores and e-commerce websites. Besides these, customers can also get renewal bonus, welcome gift, birthday gift, as reward points.

Corporate credit cards: These cards are generally offered for business purposes so that the company can provide credit cards to their employees and conveniently manage their finances.

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