What is a Credit Card?
A credit card is a financial tool that allows the cardholder to borrow funds from a bank or financial institution to make purchases or payments. The cardholder can repay the borrowed amount later, typically with a grace period of up to 50 days from the date of the purchase, without any interest charges. However, if the entire balance is not paid off by the due date, the outstanding balance will carry interest charges, which are usually set by the credit card issuer.
The cardholder is also required to make a minimum payment each month (usually between 5% to 10% of the outstanding balance). If only the minimum amount is paid, the remaining balance will be carried forward, and interest will be charged on the unpaid amount.
Different Types of Credit Cards in India
- Shopping Credit Cards
These cards are designed to reward cardholders for their shopping habits. They offer rewards in the form of cashback, points, or discounts, which can be redeemed for shopping, merchandise, travel, or other rewards. Ideal for frequent shoppers. - Lifestyle Credit Cards
These credit cards are tailored to meet the lifestyle needs of the cardholder. They offer rewards for everyday expenses, like shopping and dining, and often come with additional perks like discounts on fashion, restaurants, and more. - Fuel Credit Cards
Fuel credit cards are offered to individuals who frequently purchase fuel. These cards typically offer discounts or cashback on fuel purchases, making them a great choice for people who spend a significant amount on fuel. Additionally, they may offer other lifestyle benefits. - Rewards Credit Cards
With rewards credit cards, the cardholder earns rewards for every purchase made. Rewards can come in the form of points, cashback, or travel miles. These rewards can be redeemed for various benefits like shopping, travel, or even statement credits. - Travel Credit Cards
These cards are perfect for frequent travelers. They offer travel-related benefits such as discounted airfares, hotel stays, airport lounge access, and accumulation of travel miles. Travel credit cards can help you save on travel expenses while earning rewards for each trip.