What is Credit Card?
If you want to do some home improvements but don’t have a lot of cash, then a home conversion loan can be a good option for you. With a home conversion loan, you can borrow money against the equity in your home. This can be a great way to get the cash you need for renovations or other home improvement projects.
There are a few things to keep in mind if you are considering taking a home conversion loan. First, you’ll need equity in your home to qualify. Additionally, the amount you can borrow will depend on the value of your home. Lastly, you have to be sure that you can afford to pay back your loan.
If you are considering a home conversion loan, shop around and compare rates and terms from different lenders. This will help you get the best deal on your loan.
How do Credit Cards work?
Credit cards give you more time to pay for your purchases. Every time you make a purchase with your credit card, you borrow that money from the credit card issuer until you pay it back at the end of the month. Things to know before getting your credit card:
• Credit card companies give credit cards to individuals with a steady income.
• If you have a good credit score, you can quickly get a credit card
• You can get a Credit Card against your Fixed Deposit.
• As a credit card holder, you will be allotted a credit limit, which will be 3 to 5 times your net monthly salary. It will differ from bank to bank.
• Though a credit card is provided by popular banks, payment gateway facility is provided by Visa, Mastercard, and RuPay.
Also, read this: What is Home Loan?
However, these payment facilitators cannot stipulate other terms and conditions on the card. Facilities like minimum due amount, interest rate, reward points, etc. are decided by the credit card issuers.
What are the different types of Credit Cards in India in 2022?
There are different types of credit cards available in India today depending on the spending habits of the people. Here are 10 categories of credit cards.
1) Shopping Credit Card:
These credit cards target customers who are fond of shopping. Some of the benefits of shopping with a credit card are:
• Rewards, discounts, and cashback on online and offline purchases
• Domestic lounge access
• Milestone Benefits
• Complimentary Gift Vouchers
• E-Voucher
• Annual Fee Reversion
2) Travel Credit Card:
Travel credit cards are those that offer additional benefits on travel such as lounge access, additional rewards, and more. They come with benefits such as:
• Complimentary lounge access
• Earn air miles and co-branded benefits with airlines and travel partners
• Additional Rewards
• Tickets for concessional classes
3) Lifestyle Credit Card:
They not only reward you for your lifestyle spending but also help you save money while shopping. You will get exclusive and customized discounts from the channel partners of the card issuer. You can enjoy the following benefits with these cards:
Accumulated reward points can be adjusted against the credit card balance or redeemed against various gifts displayed in the card issuer’s rewards catalog
• Travel Savings
• Eating Privileges
• Airport lounge access
• Health and wellness benefits
• Concierge service
• Movie Ticket Offers
• Savings on fuel cost
• Insurance cover
4) Reward Point Credit Card:
These credit cards offer instant rewards on specific purchases and transactions. They are loaded with the following benefits:
• Earn points, cashback, or miles on every purchase
• Redeem rewards for money-saving opportunities like statement credit, travel booking, and online shopping credit
• Many rewards credit cards don’t charge an annual fee.
5) Cashback Credit Card:
You can avail of cashback on every purchase with a cashback credit card. The cashback received can be used for statement credits or purchases. Some cards offer straight cashback while others allow you to convert reward points into statement credits.
6) Fuel Credit Card:
They help you save fuel in the form of discounts, additional rewards, and fuel surcharge waivers. Some of the benefits of a fuel credit card are:
• Earn Reward Points
• Redemption of earned points
• Eligible for cashback
• Eligible for surcharge waiver
• Offer food
• Bookmyshow Offers
• Eligible for Turbo Points
• Can pay utility bills
• Waiver of Annual Fee
• Eligible for telecom benefits
• concierge service
7) Airline Credit Card:
Airline credit cards are specially designed for frequent travelers. Most of these credit cards offer maximum reward points when you spend on some of these partner airline tickets. They come with benefits such as:
• Access to premium lounges at international and domestic airports
• Membership in flight programs
• Bonus Reward Points when you apply for them
• Women’s Credit Card
To provide financial independence to women, some credit card companies have come up with special credit cards for women. Benefits are:
• Discount
• Prize
• cash back
• Business Credit Card
Business credit cards help businesses and corporations streamline their expenses and take advantage of a number of business-specific benefits. Some benefits are:
• Rewards or Cash Back
• Loyalty Points
• Travel Security and Expense Management.
• Creating a Credit Profile
• Secured Credit Card
These credit cards are offered against fixed deposits and are good for those who face difficulty in getting approved for regular cards.
8) Student Credit Card
There are credit cards that are specially designed for students who pursue their higher education. The eligibility criteria for this card are decided on the basis of the income of the father or guardian. Students can use this card to buy laptops, gadgets, stationery items, etc.
Benefits of Credit Card
Here are some of the most common benefits of using a credit card:
Ease of use
With a credit card, you can easily do all kinds of transactions and pay for them later. It is easier to carry credit cards than cash.
Welcome gift
Most credit card companies offer a lot of welcome benefits like gift vouchers, huge reward points, discounts, etc.
Save money
Credit card companies offer reward points, cashback, discounts, and offers on money-saving purchases
Reward points
Credit card companies give reward points on every transaction. Some credit card issuers enable you to convert your credit card reward points into cash. This can be used to cut down on your monthly bill.
Cashback
Credit card companies offer cashback on various purchases. This can save you a lot of money as you pay less than the normal price.
Discount
Credit card companies offer discounts on dining, shopping, hotels, movies, flights, etc.
Complimentary Airport Lounge Access
Some credit card companies give cardholders complimentary airport lounge access. This offer varies from bank to bank.
Free travel insurance
Credit cards offer free travel insurance coverage against air accidents, theft or loss of baggage abroad, foreign emergency hospitalization, etc. Not available on all cards.
Concierge service
Credit card companies offer concierge services that allow your travel and entertainment activities to be customized.
Credit score builder
Using a credit card helps in building a good credit score if you make frequent payments. When you use a credit card, you have a long credit history and with a positive track record of repayment, your credit score gets high.
Golf program
Most premium credit cards offer complimentary golf rounds, complimentary training sessions, entry fees, green fees, etc.
No Cost EMI
Credit cardholders can pay for their purchases in interest-free EMIs. Credit cards with tie-ups only with e-commerce websites come with no cost EMI.
Add-on card
The cardholder can obtain an add-on card for an immediate family member. Add-on Cardmembers can make purchases using the credit limit of the Primary Cardholder.
Lifetime Free Credit Card
Most credit card companies issue free credit cards for life.
Fuel surcharge waiver
Banks offer fuel surcharge waivers to cardholders on a specific amount spent on fuel every month.
Expense tracking
Your monthly credit lists all transactions, helping you track your monthly spending and plan your budget accordingly
Annual fee waiver
Banks offer annual fee waivers on reaching a certain spending limit. Some offer additional reward points on spending a certain limit per year.
Credit Card Interest Rate?
Credit card interest rates, also called finance charges, are the costs you pay for borrowing money.
How do you avoid paying interest on credit cards?
If you pay your credit card bills in full on time at the end of the monthly billing cycle, you will not be charged any interest. However, if you only make a partial payment, the issuer will charge interest on the remaining balance (or balance) that will be carried over to the next month’s bill.
How to Calculate Credit Card Interest Rate?
The credit card interest rate is calculated using the following formula:
(number of days counted from the date of transaction x outstanding balance x monthly interest rate x 12 months)/365.
For example, suppose you bought some products for Rs. 15,000 using your credit card. And the total number of days from the date of the transaction till the due date of credit card payment is 28 days.
The interest rate charged by the credit card provider is 3% per month. So, using the formula, we get Credit Card Interest = [(28 x Rs. 15,000 x 36% per annum)] 365 days = Rs. 414.25
What is a credit card interest-free period?
Credit card companies give an interest-free period to cardholders when they have to pay ‘zero interest. This is the period between the end of the credit card bill cycle and the due date of the credit card payment. Not all transactions will have the same interest-free period. It depends on the date when you do the such transaction.
Let us understand with an example.
• Let’s say your statement date is 2nd October and the payment date is 24th October. Statement date means the statement covers credit card transactions between September 3 and October 2.
• If you make the payment in full by October 24, you qualify for an interest-free period. Here, the number of days between the statement date and the payment due date is 22 days. The interest-free period of this credit card is 22-52 days.
• For transactions done on 3rd September, the interest free period is 52 days (3rd September to 24th October).
• For transactions done on 30th September, the interest-free period is 25 days
• For transactions done on 2nd October, the interest-free period is 22 days.
Processing Fees and Charges on Credit Cards
Here is a list of 7 common credit card fees and charges
1) Interest Rate (APR):
The Annual Percentage Rate (APR) charged on your credit card also affects your bills, especially when you are carrying an overdue amount. Credit card interest rates are very high. But, this is applicable only if you do not pay the total outstanding amount.
2) Late Payment Fee:
If you do not pay the credit card bill before the monthly due date, late payment charges will be levied at the interest rate.
3) Annual Fee:
This is charged once a year and the amount varies from card to card. Sometimes, there are free credit cards that come with a joining fee or annual fee for a certain time period or for a lifetime on the card.
4) International Transaction Fee:
International transaction charges are levied on credit cards when you make payments or transactions in a foreign country. It is usually 2 to 5% of the amount purchased.
5) ATM Withdrawal Fee:
When cash is withdrawn from an ATM using a credit card, a transaction fee is charged. In addition, interest is also levied on withdrawals on a day-to-day basis.
6) Cash Withdrawal Fee:
A certain percentage of your credit card limit is given to you as a cash limit. But, you will have to pay a fee of 2.5% of the amount withdrawn. This charge does not fall under an interest-free period and is levied from time to time.
7) Over Limit Charges:
You cannot spend more than your credit card limit without being charged. A huge amount is charged as the over-limit fee for such transactions.
Credit card eligibility criteria
Before applying for a credit card, you need to check your eligibility. By knowing the eligibility criteria, you can get guaranteed approval faster. Some of the most common eligibility criteria are listed below:
Age
Minimum Age Requirement:
18 years for some banks but 21 years.
Maximum Age Requirement:
Goes up to 60 years but that’s also different
Annual salary
The minimum salary required to apply for a credit card in India is around 3 lakhs per annum. This varies among card issuers.
Nationality or residential status
Citizens, residents, and non-residents can apply. However, some cards are available only to Indian citizens
Difference Between Credit Card and Debit Card
There are two types of cards that are popular among people. They are credit and debit cards. While a credit card allows you to spend pre-approved money and pay later, a debit card allows you to spend the money available in your savings or current account. Following are some of the common differences between credit cards and debit cards.
| Credit Card | Debit Card |
| क्रेडिट कार्ड क्रेडिट की एक पंक्ति है। | डेबिट कार्ड सीधे आपकी बचत या चालू खाते से जुड़ा होता है। |
| आपके पास केवल एक क्रेडिट सीमा है, जिस तक आपको खरीदारी पर खर्च करने की अनुमति है। | यह आपको अपनी बचत या चालू खाते पर उपलब्ध राशि के अनुसार खर्च करने की अनुमति देता है। |
| क्रेडिट सीमा के एक निश्चित प्रतिशत के अधीन एटीएम से नकद निकासी की अनुमति है। इसके अलावा, नकद निकासी पर निकाली गई राशि के एक निश्चित प्रतिशत का शुल्क लगेगा। | एटीएम से एक निश्चित सीमा तक मुफ्त नकद निकासी की अनुमति है। उस सीमा से अधिक बैंक की आंतरिक नीतियों के अनुसार प्रभार्य है। |
| आपको मासिक बिल विवरण मिलता है। | कोई मासिक बिल नहीं है, लेकिन आप अपने पिछले लेनदेन का विवरण प्राप्त कर सकते हैं। |
| यदि आप क्रेडिट कार्ड बिल का पूरा भुगतान करने में विफल रहते हैं तो ब्याज दरें लागू होती हैं। | कोई ब्याज नहीं लिया जाता है। |
| शुल्क में शामिल होने की फीस, वार्षिक शुल्क, देर से भुगतान शुल्क, बाउंस चेक शुल्क, बैलेंस ट्रांसफर पर प्रसंस्करण शुल्क आदि शामिल हैं। | कार्ड पर शुल्क बैंक से बैंक में भिन्न होता है। यदि लागू हो तो वार्षिक शुल्क और पिन पुनर्जनन शुल्क हो सकता है। |
| विभिन्न खरीद पर रिवॉर्ड पॉइंट, कैशबैक, छूट और ऑफ़र हैं। | ऐसे कोई विकल्प नहीं हैं। हालाँकि, कुछ बैंकों ने अब कुछ डेबिट कार्डों पर रिवॉर्ड पॉइंट पेश किए हैं। |
| क्रेडिट लिमिट पर लोन लिया जा सकता है। | कुछ बैंकों के पास ओवरड्राफ्ट सुविधा उपलब्ध है। |
Secured credit card for bad credit
A secured credit card works just like a credit card, except you need to have a fixed deposit to avail of it. The bank uses it as collateral in case you default on your payments.
A secured credit card is usually used by people who cannot qualify for a regular unsecured credit card because they have poor credit or do not have a sufficient credit history.
Since a secured card requires collateral in the form of a fixed deposit with the bank, even people with bad or no credit can get the card as the bank is secured against default.
This is a simple and quick way to improve your credit score and build your credit history, provided you make all your payments on time.
People with bad credit can use secured credit cards to improve their credit scores. Once the past negative issues are removed, the credit score remains intact and does not decrease.
However, in order to improve your credit score, you need an active credit line. In such circumstances, you can avail of a secured credit card and improve your credit score.
Business credit card for entrepreneurs
Establishing a business and running it successfully will require a steady cash flow for both long-term and short-term use. A business credit card is a quick means of getting finance quickly.
When you apply for a business loan, there is an interest rate attached to it which would be quite burdensome. But with a business credit card, you can enjoy a 0% interest rate if you can pay bills on time.
You do not need collateral to get a business credit card. Also, with a credit card, it is easier to manage company finances and keep track of expenses as you get monthly statements. Reward points, discounts, and cashback on purchases can help you save more on operational costs.
Entrepreneurs planning to start a business may find a business credit card an ideal tool for managing the company’s finances.
Credit Card Protection Against Fraudulent Transactions
As per RBI guidelines, there shall be no liability to the customer in case of fraudulent transactions or negligence on the part of the bank, even if the fraud is not reported by the customer. In case of a third-party breach, the customer has to inform about the unauthorized transaction within 3 working days to avoid any liability.
If the customer informs after 7 working days, the bank is free to determine the customer’s liability.
Card issuers now provide another layer of security with a PIN number. If your credit card has a microchip, you will also need to enter a PIN number to approve the transaction.
Only you know your PIN number. Therefore, if your card is stolen, it cannot be used for fraudulent purchases as the payment will not be accepted without the PIN number.
All conventional cards have now been replaced by EMV chip cards. EMV stands for Europay Mastercard and Visa has developed this technology. In a normal card, all the data of the user is saved on it and it remains forever.
In EMV cards, fresh user data is created every time the card is used for any transaction. This prevents fraudsters from copying user data and creating a new card with the same details. EMV cards protect the cardholder from phishing, skimming, and phishing.
How to increase my credit card limit?
Your credit limit refers to the amount of credit available to you on your credit card. However, to maintain a good credit score, it is advised not to spend more than 30% of your credit limit.
So, for example, if your credit limit is Rs. 60,000, make sure you don’t spend more than Rs. 18,000 every month. Constantly spending more than 30% of your limit may indicate that you lack credit or lack the discipline to spend.
As you advance in your career, as your income may increase, so does your ability to get a higher credit limit. If you have been prudent in repayment and have not defaulted, you can request an increase in the credit limit.
After you make a request, the credit card company analyzes your past payment records and approves a credit limit increase based on your income and eligibility.
An increase in credit limit helps you spend more and keep your credit utilization ratio at a healthy level. If you believe you are eligible for a credit limit increase, contact the credit card issuer to approve your request.
How many credit cards should a person have?
There is no ideal or average number of credit cards a person should have. It depends on factors like your income, monthly expenses, how you manage your finances, and your ability to plan and make timely payments on multiple cards.
If you’re new to credit cards, it’s a good idea to use one for a while and get used to the payment method. Once you are comfortable and confident that you can afford the extra payment, you can apply for another card.
A low credit card utilization ratio is considered prudent credit behavior by the credit bureaus that generate your credit score. Having more than one card can help you maintain a good credit utilization ratio and maintain a positive credit score.
Also, multiple credit cards can help you get a higher credit limit. You can split the costs and manage your finances effectively.
With multiple credit cards, you can get more reward points, cashback, discounts, and offers at multiple partnering outlets and e-commerce portals. Because one credit card company may have a partnership with one major merchant, the tie-up with another may not.
Thus, having a second card gives you the option to cover our partner outlets to avail discounts thereby saving you more money.
Choosing the right credit card
Many people ask about the best credit card. There is no such thing as the best credit card, but the right credit card can be the one that best suits your spending habits.
Everyone will have different needs in life depending on their lifestyle, likes, and dislikes. Realizing this, many credit card companies have designed special credit cards for individuals under various categories. The user can do a comparative analysis and choose the one that best suits their interests and spending behavior.
If you are someone who loves to shop, then you can choose a credit card that comes with huge reward points and discounts on shopping-related aspects. If you travel frequently, you can choose a travel credit card that comes with discounts on flight and hotel bookings.
Study your spending habits and compare the benefits of cards from multiple credit card issuers. Choose the one that matches your needs. Use reward points and discounts to save on your monthly expenses.
FAQ’s
1. What is the best way to get a credit card?
You can apply online on the official website of the credit card issuer or on any of the third-party financial websites. You can also get instant approval on a credit card from the bank where you maintain a salary or savings account.
2. What is the minimum income required to get a credit card?
Each bank has a different income limit for providing credit cards. In general, most companies have a minimum limit of Rs. 2 lakh per annum.
3. Can I get a credit card without a credit score?
Yes, you can! Some credit cards are specifically designed for the purpose of score building. You may also be eligible for a credit card with a steady source of income.
4. What is the minimum amount due on the credit card?
The minimum amount payable is a fixed percentage of your outstanding balance. Lenders allow you to pay the minimum amount due so that you can avoid late payment charges. The remaining balance will be carried over to the next month’s bill statement. However, the remaining amount will carry an interest rate as decided by the bank.
5. How many credit cards can a person have?
A person can have more than one credit card. There are no restrictions. But you need to ensure that the payments are made on time and preferably in full to avoid paying interest rates.
6. What can I do if an unauthorized transaction is made using my credit card?
You can report to the credit card company that the transaction is not you. You will not be held liable for the transaction and the payment will be modified as per your complaint. It should be reported within 3 days of the fraudulent transaction.
7. How is the credit limit on your card determined?
The bank examines a number of factors to determine your credit card limit. This includes income, credit score, debt, limits on other cards, etc. It is usually up to 5 times your net monthly salary. However, it may differ for different individuals depending on their credit profile.
8. Can I increase the credit limit on my credit card?
Yes, you can increase the credit limit by contacting the credit card issuer. Based on your past repayment record and income, your credit limit will be revised.
9. Can I use my credit card abroad?
Yes, but it depends on the type of credit card you use. Some cards can be used worldwide without restriction. Such cards may have a higher annual fee but come with more reward points and benefits.
10. What is the CVV number on the credit card?
CVV stands for Card Verification Value which is printed on the back side of the credit card. It has to be kept secret as it is used for various online transactions.
11. How many add-on credit cards can I get for my family?
Most credit card companies allow a maximum of 3 add-on cards for your spouse and children. The add-on cardholder should be your immediate relative.
12. How do I redeem my Reward Points?
You can redeem your reward points by visiting the official website of the card issuer. You can either redeem the points for gift items available on your card or convert them to cash if the card issuer offers that facility.
13. What is the value of Reward Points?
The value of reward points may vary from bank to bank. Normally, 4 reward points is equal to Rs. 1. However, some banks may consider 2 Reward Points equal to Rs. 1. It depends on the type of credit card and the benefits associated with it.
14. How to convert your big purchases into EMI using a Credit Card?
Initially, you can check whether the product you are about to buy has an EMI facility or not. If yes, then you can avail of the same by choosing the EMI option.
You can also contact the card issuer via customer support team, SMS, mobile banking, etc., and request them to convert your large purchases into EMIs. Banks usually allow any purchase above Rs. 2000 will be converted into EMI.
15. What are the charges for cash withdrawal using my Credit Card?
Most banks charge up to 3% of the amount withdrawn. For example, if you have Rs. 10,000 may be charged using your credit card. 300. Cash withdrawal using a credit card is not covered under an interest-free period.
16. Which bank has the best credit card in India?
There is no single answer. The best credit cards are largely determined by your needs. Signature Visa Credit Card, Yatra SBI Credit Card, HDFC Regalia Credit Card, and Diners Club Black Credit Card are some of the popular credit cards available. Be sure to use our credit card selector to filter and find the best credit card based on your needs.
17. Which is the best credit card with no annual fee in India?
There are some credit cards in India that offer zero annual fees. Some of them are IndusInd Pioneer Legacy, HSBC Visa Platinum, and Citibank Rewards Credit Card.
18. Can I apply for a credit card online?
Yes, you can apply for a credit card online. You can either apply on the Credit Minister website or you can apply from the official website of the bank. On the Credit Minister website, you can use a credit card eligibility calculator to find the best credit card that suits your needs. Then you can apply for what you find suitable.
19. Can I get a credit card without a job?
You can get a credit card even if you do not have a job but you have a good amount coming into your account every month. Alternatively, if you have a fixed deposit, you can apply for a secured credit card against it.
20. Can I get the credit card in a day?
Yes, in today’s digital age, credit card applications can be processed within a day. Just make sure that you have all the required documents with you to complete the process quickly.
