What are the different types of Credit Cards?

A credit card is filled with a lot of benefits. You may earn rewards, cash back, miles, vouchers, and dining, etc… But all these benefits are not available on a single credit card. There are different types of credit cards designed for specific users

The award program for these credit cards also varies upon the credit card. Picking the right type of card reduces your chance of going into credit debt. 

To know more about: What is Credit cards and Advantages of Credit cards

How Credit Cards can be classified into different types?

The first universal credit card by Diner’s club Inc. in 1950 and the Travel and Entertainment card by American Express Company in 1958 are the three types of credit cards got introduced in the early stages. As the usage of credit cards increases, the types of credit cards also increase. 

Below are the different types of credit cards at present.

1) Basic Credit Cards

People who wish to try out the features of credit cards for the first time can opt for these Basic credit cards. It must be a good choice for credit card beginners. But you can purchase only with the provided credit limit. The credit limit for this card is based on your income. 

It has a lower interest rate. Therefore no more additional features are available for this beginner card. These cards can also be known as “ Starter cards”. 

2) Secured Credit Cards

The credit score of an individual is important while applying for credit cards. If they have a poor credit score, then their application can be rejected at any cause. In this condition, they can opt out of Secured credit cards.

You need to deposit a particular sum of the amount as security. In most cases, the sum will be equal to your credit limit. This initial deposition of the credit limit will be a security for credit card companies. If you pay your credit bills on time then the company would return the initial deposit to you after few months. A secured credit card is used to ensure the credit card profile. 

The process of applying and approving is fast for secured credit cards. Some of the credit card companies provide a grace period for security credit cardholders. 

3) No Annual Fee Credit Cards

You can enjoy several benefits from Annual Fee credit cards. It is best suits for you. But if you are a person who doesn’t use credit cards on a regular basis, then no annual credit card is the best option for you. 

Here you don’t need to pay an annual fee for credit card usage. This card too carries advantages less than that of annual fee credit cards and higher than that of basic credit cards. ICICI Bank Instant Platinum credit card is one of the best No Annual Fee credit cards at present. 

4) Low-Interest Credit Cards

If you are worried about the higher interest rate of credit cards you can choose Low-interest credit cards. As said earlier it has a lower interest rate but not 0%. 0% interest is only for balance transfer credit cards. For Low-Interest credit cards interest range from 1.5 to 2.9%.

HDFC Bank Infinia Credit card holds best for the Low-interest Credit Cards. This HDFC credit card comes with an interest rate of 1.99% per month. 23.88% is the total interest per annum. 

5) Balance Transfer Credit cards

Transferring the balance is general in all kinds of credit cards. Balance transfer credit cards offer low-interest rates on transferring balances only for a specified period. Some of the credit card companies provide 0% interest also. 

If you are in debt having a higher interest credit card, you have an option to change the outstanding balance to the Balance Transfer credit card. Now you can clear your debts with ease. Bajaj Finserv RBL Bank Supercard is one of the best Balance Transfer Credit Cards. 

6) Reward Credit Cards

One of the most widely used credit cards used all around the world is Reward Credit cards. It encourages the user to experience a joyful experience of using their company’s credit card by providing rewards for every purchase they make.

The rewards always depend upon the banking institution and credit card companies. The rewards get updated when you swipe the card for making payments. You can redeem the reward points by using the number of redeeming options provided by the credit card company and banking institutions. 

For Example, YES Bank Prosperity Rewards Plus Cards tops the list of Reward Credit cards. It offers 4 reward points for every grocery purchase worth Rs200 via YES cart. It offers 2 reward points for every purchase of Rs 200 in selected merchant categories other than the YES cart.

HSBC Smart Value card offers 3 reward points for Telecom and Dining for every Rs 100 you spent. For other purchases, it offers 2 reward points for every Rs 100 you spent. Thus the reward points and the redeeming options vary according to the Banking institutions and credit card companies.

7) Cashback Credit Cards

Cashback Credit Cards are also one of the most used credit card variants around the world. They would have given a certain percentage of the amount you spent on the credit card as cashback. If you have spent Rs 100 then you would have received a cashback of Rs 10 which accounts for 10%. 

There are some credit card companies that provide cashback only for making petrol or diesel transactions. 

For Example, HDFC Moneyback Credit Card allows you to redeem the reward pint earned in the form of cashback. It lists the top in Moneyback cards. Secondly, the Citi cashback credit card allows you to earn cashback in the categories of Movie ticket bookings, telephone bills, utility payments, and reward points.

8) Travel Credit Cards 

A bunch of premium features is offered by Travel Credit Cards for travelers. This is one of the best options for travelers who travel on business or during leisure time. The credit card companies had a partnership with the travel partners. 

Travel Credit Cards features include Travel insurance, universal acceptance, and currency conversions. 

For Example, the American Express Platinum Travel Credit card holds first in the list of travel credit cards. They are best suited for travel vouchers and lounge access. Then SBI card Elite provides lounge access, movie, and dining. 

9) Shopping Credit Cards

Deals and offer vouchers are earned as a reward while using the shopping credit card. Shopping credit cards suit well for those who purchase regularly. Shopping can be in any form whether the online platform or the offline stores. 

Rewards will be based on the products you purchase. For Example, the Axis Ace credit card is the best known for a shopping credit card. They provide 5% cashback on all bill payments. You can get the best use of the card by utilizing it on the platforms like Google Pay, Swigy, Ola, and Zomato. 

10) Entertainment Credit Cards

Credit cards that provide deals and offer entertainment-related purchases are known as Entertainment Credit Cards. Also, the purchase of a movie ticket, concert ticket, amusement ticket, and other events comes under Entertainment Credit cards. 

For Example, HDFC Bank Times Platinum Card suits the best entertainment credit card. This card offers you 25% on all movie ticket booking on the Book my show. 

11) Air Miles Credit Card

One of the best reward-providing cards is the Air Miles credit card. Generally, you should earn your reward as a mile for every time you swipe the card. This will be the best fit for those who travel in airlines frequently. 

Reward points can be redeemed as miles which can be used for airline booking. You can use it for both domestic and international flights. For Example, Citi Premier Miles Credit Card offers you 1000 miles on every Rs 1000 you spend. Jet Privilege HDFC Diner club offers a reward of 30,000 JP miles as a welcome bonus. 

12) Lifestyle Credit Cards

Rewards can be awarded for the purchasing of fashion shows, nightlife, and premiere screenings. These types of credit cards are known as LifeStyle credit cards.

13) Premium Credit Cards

It is not an easily approvable credit card for everyone. Generally premium cards can be accessed only by a few. It offers free access to golf clubs and airport lounges. You can even get a personal manager to managing this credit card asset.

14) Co-Branded Credit Cards

Banks and credit card companies would make a partnership with certain brands. This type of credit card is known as a Co-branded credit card. You will earn more rewards while purchasing from the partner’s company and vice versa. 

15) Student’s Credit Cards

This type of credit card user is mainly a college student. As the students didn’t earn bank won’t ask for their credit history. Also, it comes with a low rate of interest. Even though you need not provide a credit score, you need to qualify the certain criteria possessed by the banking sectors. 

16) Business Credit Cards

As the name possess this type of credit card is particularly chosen for business purposes. As it is a business credit card they would need a good credit score. This ensures that the personal and the business expenditure are maintained separately. 

There are different categories of business credit cards such as small-scale businesses, medium-scale businesses, large-scale businesses, and even multinational businesses. ICICI corporate credit card is one of the best chosen for small-scale businesses. 

17) Prepaid Credit Cards

With this type of credit card, you should need to deposit a certain amount in your account. But the money will be deducted every time you swipe the card. This is most similar to the working of debit cards. 

Hereby concluding that these credit cards work best when you choose wisely from the above-mentioned types. While choosing think of your lifestyle and how you are spending your money?. Kindly do research of your own before the selection of credit card types. 

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