In 1958, when the Bank of America launched the first credit card, nobody knew it would become an indispensable tool. Today, the market is flooded with a variety of different credit cards. With so many choices available, it is natural for the consumer to get confused.
Here, we explain about different types of credit cards with features and benefits. Knowing the same will help you determine the best choice for you.
Types of Credit Cards
Here are a few popular types of credit cards.
1. Rewards Credit Card
One of the most popular credit cards in India, and many people like to own this one. As the name suggests, this type of credit card offers you rewards or points on every purchase. The lender fixes how many points the borrower gets for a purchase value. This value may also be different for different types of purchases. You can redeem the rewards when you collect a specific number of points.
2. Travel Credit Card
A travel credit card is the right option if you travel a lot. This card provides you rewards when you book your travel with it. Different travel cards allow you different benefits. While some travel credit cards offer free airport lounge access, some provide free concierge services. Complimentary lounge access at the airport helps you relax and enjoy food, adding convenience when you are out of your home.
One of the best benefits is air miles. You get air miles when you spend money on buying air tickets, booking hotels, etc. You can redeem these air miles for buying air tickets for free.
Travel credit cards also offer travel insurance, which helps you when you need to cancel or postpone your trip, have lost luggage, or have a medical emergency in a different country.
3. Secured Credit Card
You should get a secured credit card if you don’t have a good credit score. The issuers approve these cards in return for a security deposit. You will easily get this card as you are paying the collateral. The credit limit of a secured credit card depends on your deposit amount.
One of the best parts about this card is that it helps you build a good credit score. You can take this card and pay bills timely. This will increase your credit score. When the issuer is confident about you, looking at your responsible credit behavior, they also offer you to move to an unsecured credit card account.
4. Cashback Credit Card
Another good credit card is the cashback credit card. This card is best for people who want an instant cashback reward for everyday spending. When you make a purchase, it offers immediate cashback. The cashback amount is paid according to the amount you spend. The cashback also depends on the product or service category like groceries, medicines, utilities, clothes, etc.
The amount of cashback is reflected in your card account. It is important to know that some cashback credit cards have a cap on the amount each month. Clarify the same with your lender.
5. Fuel Credit Cards
Fuel Credit Cards are also popular in the country. Those who use their vehicles for long drives should consider this type of card. The card provides a specific number of litres of fuel for free, fuel surcharge waivers, points for buying fuel, etc. This allows the cardholders to save tremendously on points. When you earn points for filling the tank, you can redeem the same later for buying more fuel or other things.
6. Student Credit Cards
There is a delightful offer for the students too! If you are studying, you can apply for this card and get help handling your finances. This card will also play a pivotal role in starting your credit journey. You can use the card responsibly and use the opportunity to build a healthy credit history.
Since these cards are for students, they offer a limited credit limit. This is imperative to inhibit them from reckless spending. Also, the application for a student credit card is very simple. They have to meet only a few requirements compared to other credit cards.
Wrapping Up
Exploring different types of credit cards is a good way to know which one suits your lifestyle! Each credit card is created to benefit a certain section of people. Find a credit card that can exhibit your style of spending! You can also keep two to three credit cards to match different objectives. This way, you can enjoy different benefits with different cards.
Get more information on duefactory.com.
FAQs
1. Which is the best type of credit card?
Ans. Finding the best credit card out of the different options available in the market will depend on your spending and financial objectives.
2. What is a reward credit card?
Ans. A rewards card provides rewards or points for your shopping. You can redeem the same for different products and services.
3. What is a cashback card?
Ans. As the name suggests, a cashback card offers an immediate return on purchases. The return percentage depends on the amount spent and product category.
4. Are travel credit cards worth it?
Ans. If you are an avid traveler, you should take a credit card with benefits like airport lounge access, air miles, travel insurance, etc. You can also avail of benefits like restaurant discounts, activities discounts, etc.
5. I have a poor credit score. Which credit card I can get?
Ans. You can take a secured credit card with a poor credit score. The best thing about this card is that it helps you build a good credit score. You can increase your credit score by paying the bills timely and showing responsible credit behavior.