What is a Credit Card?
A credit card is basically a plastic card provided/issued by banks. It allows you to borrow money from the provider to purchase whatever you want, be it a flight ticket, food, gadget etc. At the end of the billing cycle, you have to repay the principal amount borrowed along with the interest amount. It can be used for both offline and online purchases.
Thus through credit card, you can manage your urgent expenses without having to worry about cash-flow or having hard cash at hand. You can apply online for a credit card and receive the same within a day or two. Many banks offer benefits on credit cards, such as welcome gifts, exclusive privileges, rewards, airport lounge access, fuel surcharge waiver, lifestyle and travel facilities, air miles, cash-back, etc.
At loanbaba.com, we will provide you maximum information about different types of credit cards and its providers, and acquaint you with the features and benefits of these financial products.
Features of Credit Cards in India
There are several features attached to credit cards. Depending on the provider and type of credit card, the features will differ. Some of these are mentioned below.
- 1. Highly Secured EMV Chip Credit Cards: EMV (Europay Mastercard and Visa) chips-based credit cards have replaced the older magstripe cards. The latter only had a magnetic stripe at the back, making it less secure in preventing any fraud. The EMV chip on the other hand is completely foolproof. It is usually placed close to the top of the left edge of a card. The look of the chip is similar to that of a SIM card. The EMV chip credit cards store payment data on the chip for dynamic authentication.
Another benefit of EMV credit cards is that both your secret and card PIN is used to make the transaction. A unique encrypted code is generated when the credit card is used. This code is known as cryptogram or token, which is specific for that particular transaction only. This token cannot be reused, as it comes from a combination of information in the terminal where the card is swiped at, and that of the chip.
Thus, every time you use the card for transaction, a dynamic data is generated, making it impossible for anyone to copy the user data from the credit card, preventing fraud. It is much more secured than credit cards without a chip, and only with a magnetic stripe.
- 2. Contactless Payments: Credit cards these days may come with the facility of contactless payment. Usually, when making a payment you have to swipe or dip the card, but contactless payment makes that obsolete by having you just tap/wave the card on the payment terminal, and the payment gets done, just like that! No need to enter any security PIN. The cards use Near Field Communication (NFC) technology to make this possible.
The credit card with contactless chip has a RFID (radio frequency) antenna. These are sometimes known as RFID chip credit cards or RFID credit cards as well. So, when you wave the card over the terminal, the one-time code and radio frequencies of the card are used to complete the transaction. With such a credit card, you can quickly process the payment.
However, there is upper cap to the amount you can transact using contactless payment option. Usually, it is up to Rs. 2,000. It is safe and secure to make contactless payment, as there are several layers of security involved to protect against unauthorized or fraudulent activities.
- 3. Credit Card Loans: You can get pre-approved loans on credit card. Though the interest rates are higher on such loans, these come handy when you need urgent cash, and cannot opt for traditional loans such as personal loans or small cash loans etc.
- 4. Lifetime Free Card: Some banks offer lifetime free credit cards. It means credit cards with no annual membership are completely possible.
- 5. Balance Transfer: You can transfer the outstanding balance in the existing card to another provider and thus, repay the amount at a lower interest rate or in the pursuit of availing better benefits. Doing this shall save you money or bring more comfort.
- 6. Global Acceptance: Most of the credit cards issued in India can be used internationally as well, thus accepted by a majority of merchants all over the world.
- 7. Utility Bill Payment: You can quickly pay off utility bills with credit cards. Thus, skip the queue, and make instant bill payment.
- 8. Joining and Annual Fees: When you apply for a credit card, you have to pay a specific amount for enrolment. This amount is the joining fee. You have to pay a certain fee for the yearly usage of the credit card. This fee is called the annual fees. Some banks do not charge any joining or annual fees.
- 9. E-statement: You can receive e-statement of all the expenses met on credit cards, at the end of each billing cycle. The statement can be accessed online, any time.
- 10. Insurance Coverage: Credit cards can sometimes come with insurance protection, for instance, life insurance, travel insurance, etc.
- 11. Alerts: When you make any transaction on your credit card, you will receive an SMS and email alert. Such alerts are also received to remind about pending payments as well.
- 12. Cash Withdrawal Facility: You can even use certain credit cards to withdraw money from an ATM. A small fee can be charged for this service.
Why is Credit Card Important?
Below-given are the reasons as to why owning a credit card is important:
It takes care of your urgent and short-term financial needs, for which you do not have immediate funds available.
You do not have to visit a bank again and again, submit documents, and go through an entire procedure of taking a loan, but get immediate credit as and when you use the card.
The perks such as discounts, cashbacks, reward points, air miles, and other benefits on spends.
How to Use a Credit Card?
When a financial institution issues a credit card, a revolving account for that card is created. When you receive the credit card, you can utilize it to make purchases on credit. The credit is basically the amount you have borrowed from the card issuer. You have to repay the outstanding amount with interest within the billing cycle or at the end of the same. There is a credit limit set and you should try not to exceed this limit.
You need to simply have the card swiped at merchant stores to make payments. The transaction is authenticated by entering the PIN number. In case of online payments, at the checkout section, you will have to authenticate the payment by providing the PIN or one time password (OTP). You can also check your credit card balance anytime and keep a check on the credit utilization.
Credit Card Eligibility Criteria
The eligibility for a credit card depends on the provider and the type of card you are applying for. Below-mentioned are eligibility criteria for credit card.
- Nationality: You must be an Indian resident. Some providers offer credit cards to non-resident Indians as well.
- Employment Status: You should have a steady source of income. Banks usually offer credit cards to salaried or self-employed individuals.
- Income: Depending on the card you choose and your monthly income, a type of credit card will be approved, and assign a credit limit.
- Age: Minimum age to avail a credit card is 21 years. However, a few providers may even offer the card to those above 18 years of age.
- Credit Score: You can get a credit card without having any previous credit history. However, a good CIBIL score improves your eligibility to it.
Documents Required for a Credit Card Application
You need to submit a photocopy of the documents, and not the original. The provider may ask for the originals, only to verify the photocopy documents. Below-mentioned are documents needed to apply for credit cards:
- Identity Proof (any of the mentioned): PAN card, voter ID card, Aadhaar card, passport, etc.
- Address Proof (any of the mentioned): Ration card, electricity bill, passport, telephone bill, driver's licence, voter ID, or last two months’ bank statement, etc.
- Age Proof (any of the mentioned): Birth certificate, voter ID card, passport, school passing certificate.
- Income Proof: Latest income tax proof, bank statement of salary account, latest payslip, Form 16, etc. In case of a professional or businessperson, certified financial document, computation of income, and tax return on the business.
Different Types of Credit Cards You Can Avail
Banks offer credit cards that cater to different needs, preferences, and tastes of customers. Below, we have mentioned the major categories for which a credit card may be issued.
- Entertainment: There are credit cards for dinners, clubs, concerts, movies, etc. You could get complimentary drinks, exclusive invites, discounts, earn rewards on spends, and a lot more.
- Shopping: Lifestyle cards are offered to get deals, rewards, and discounts on shopping from retail outlets, brands, and a lot more. Both offline and online shopping rewards can be gained on shopping with the credit card.
- Travel: If you travel frequently, then you should consider a travel credit card. Here, on spends you earn miles. Some come with insurance cover for baggage, lost items, your life, and more. These cards also offer access to airport lounges, concierge services such as booking of hotel, flight, or cab.
- Fuel:If you refill your gas tank often, then fuel surcharge waiver credit cards could benefit you immensely. When you spend on fuel and its related products, you can earn credit card reward points. Some providers have a list of petrol pumps or swiping through a bank specific machine to get the rewards. So go through the terms and conditions of fuel cards, before you go for any.
- Cashbacks and Rewards:Banks often partner with stores to offer you amazing deals. The cashback and rewards credit card will give access to previews, exclusive deals and sales, and more. This card will not be limited to rewards from retail shopping, but even grocery and household need stores. So anytime you make a purchase using this card, you will earn rewards or cashback on spends.
- Other Credit Cards:There are unique credit cards for specific needs as well. Such as student cards, educational cards, golfing cards, and more. Find out more about need-specific cards you are interested in with your respective bank.
Things to Consider Before You Apply for a Credit Card
Below-mentioned are some of the things to keep in mind before applying for a credit card:
- 1. Annual Percentage Rate: The credit card interest rate appears as an Annual Percentage Rate (APR). It can be variable or fixed, and tied to the prime rate mostly. Cards with variable can have the cost of loan fluctuate as against fixed-rate card where the rate of interest remains the same from month to month. To know how much interest you need to pay every day, convert the APR to a daily percentage rate. This can be done by dividing the APR by 365. For instance, the APR is 15% on your credit card then the everyday rate will be 0.041 percent, i.e. 15% divided by 365.
Remember to pay at least the minimum amount on your bill every time and on time to not increase the cost of borrowing. If you carry forward the dues to the next month, then the rate of the loan too climbs, making the borrowing quite expensive.
- 2. Credit Limit: You will be assigned a credit limit, which is the maximum amount you can borrow upon the card in a year. This limit will be decided upon your income, credit score, and the type/purpose of the card. The credit limit can increase or decrease as per the utilization of the card and your income.
- 3. Other FeesThere could be other fees and charges applicable on the card, other than rate of interest charges on spending. This could be the GST, annual membership fees, and penalties in case you do not pay the bill on time or go over the credit limit. There are cards with Lifetime Free Membership as well. Here, there is no annual fee on the card. Other common charges include fee for balance transfers, transactions, cash advances, etc.
Credit Cards Offered by the HDFC Bank
Loanbaba is partnered with HDFC Bank for credit cards. You can apply for any of the HDFC Credit Card from the listing below.
|HDFC Bank Credit Cards
||Reward Points* (RP)
||Spend Rs.150 = 4 RP Annual >Rs.8 lacs = Bonus 15000 RP
||Ideal for Travel, Hotel
Mark-up fee on International Transactions- 2%
||Spend Rs.150 = 4 RP Annual >Rs.6 lacs = Bonus 7500 RP
||Suitable for Travel, Hotel 3 International and 8 Domestic Airport Lounge Access
||Spend Rs.150 = 4 RP
||Get it for Travel, Rewards 1 RP = 1 Air Mile Up to 6 Airport Lounge Access at over 700 Lounges globally.
||Spend Rs.150 = 5 Reward Points
2X RP on Dining and 10X RP on Travel & Shopping
|Perfect for Travel, Hotel, Shopping No Pre-set Spending Limit
||Spend Rs.150 = 2 RP
||Best match for Shopping and Entertainment
||Spend Rs.150 = 3 RP
||Just the right credit card for Shopping and Dining
||Spend Rs. 150 = 20 RP on Snapdeal
||The ideal one for Online Shopping
|Diners Club Black
||Spend Rs. 150 = 50 RP (10X) at Key Retail/Online Brands
||For best Luxury & Lifestyle
||Spend Rs.150 = 4 RP on Online Spends
||Available for Cashbacks, Online Shopping
||Spend Rs.150 = 1 RP 25X RP on Birthday Spending
||Known for Reward Points
||Cashbacks on Bill Payments & many more
||Idea for Cashbacks and Fuel surcharge waiver
||Spend Rs.150 = 3 Reward Points
||Applicable for Women and suited for Dining
||Spend Rs.150 = 3 Reward Points Earn 50% more Rewards on Dining
||Applicable for Doctors and offers a Priority Pass Membership
||Spend Rs.150 = 2 Reward Points 3X RP on Weekend Shopping
||Applicable for Teachers and has some of the Best Lounge Programs
Why Choose Loanbaba to Find a Suitable Credit Card?
Loanbaba is a well-integrated and a reliable platform for finances services and products. Right from loans to credit cards, the website provides the best options. It gives a detailed insight into the financial service pr product from top banks and financial institutions, so that you can compare these, and select the ideal one.
- Compare Credit Cards By Banks: Loanbaba helps you know the fees, charges, interest rates, deals, rewards, discounts, and other aspects about best credit cards in India. You can compare the offers and select a suitable one for your needs.
- No Service Fees: The website does not ask for any service fee or charges for serving you. Any charges if applicable on the credit card are by the credit card issuer. Loanbaba offers service free-of-charge.
- Credit Card Online Application: You can avail any type of credit card from Loanbaba partnered banks and financial institutions. Simply apply through the website online and get the credit card in a short time. No need to manually visit the bank for any requirement.
- Instant Processing: Once you apply for the credit card, your application is looked into instantly without delay. So, you can expect a better turnaround at Loanbaba, where you can apply for HDFC credit cards in no time.
- Great Customer Service:The customer care service provides a seamless experience, wherein your needs are looked into, and so, the website is able to advice you on the best credit cards in India, suited to your financial position, and interest.
Frequently Asked Questions about Credit Card in India
Below-mentioned are FAQs about credit cards.
Below-mentioned are some of tips to help you find the right credit card:
- The Type of Reward: Credit card offer rewards in terms of reward points that you can redeem on purchases in travel, lifestyle dining, retail and more. Then they offer cashback, which you can utilize to offset bill, or air miles that can be transferred to select airline’s frequent flyer programme, reducing the trip cost significantly. So identify your need for rewards, and choose a credit card accordingly.
- Spending Habits: Identify your spending habits – do you spend more on dining and less on groceries every month? Then probably a reward card on dining spends is best suited. If a good portion of your earning goes towards internet transactions, then probably you can get a credit card which has rewards on online transactions.
- Welcome Offers: Most of the credit card providers have attractive bonus offers for customers. The offers could be huge bonuses, miles, fuel surcharge waivers, or latest gadgets and discounts.
- Payment Options: Almost every provider allows making payments through multiple channels. If you are the one who often forgets the due date of the bill, then you can set the payments to auto debit option. So that when the payment date comes, your account will be automatically debited of the amount.
- Fees and Charges: You should compare the fees and charges along with interest rate on different credit cards. You may choose a card as per affordability for annual fee and joining fee. Enquire if there are any hidden charges.
Debit card helps you to withdraw money from your savings account. It is also used for any card-based transaction where an amount from your account is transferred to another account. Basically, it is an instrument that helps you negate existing finances in your account to another. But, a credit card is an instrument that allows you to pay/borrow funds, which you can repay later.
For banks to consider you as an ideal candidate to offer a credit card, a CIBIL score over 650 is necessary. In this case, the provider will consider you as a responsible borrower and you may qualify for an unsecured credit card. However, there are many banks offering credit cards to customers who do not have much of a credit history, but employment credibility, and other factors, making them eligible for a credit card.
There is no said limit to the number of credit cards you can own. The apt number will depend on your spending behaviour, purpose of the credit card, and your financial ability. As long as you can use the credit cards you own responsibly and pay the dues in time, then none of these will negatively affect your credit score or mar the trust of banks in providing you a new loan or a credit card in future.
You do not have to pay interest on every transaction, but if you do not repay the due amount in time then the unpaid due will attract an interest along with every new transaction, until you repay the amount in complete.
Few credit cards have protection against fraud, known as liability protection cover. Here, the cards get protection against loss, theft, and in case of fraudulent transactions. Check with the bank, if your credit card has this specific cover. To get the cover in time, you have to immediately inform the provider about the loss, theft, or fraud.
The possibility of a late payment affecting credit score will depend on the number of days by which the payment is delayed, or the number of times the amount has been left as due, etc. Depending on these conditions, the credit card issuer will decide if it is necessary to report the same to credit bureaus and agencies. Once the dues get reported, these will definitely impact your credit score. Thus, it is advisable not to make any late payments, as much as possible.
On a credit card statement, the minimum amount due mentioned is the minimum amount you have to pay if you are unable to pay the total outstanding. This amount is usually 5% of the total outstanding amount. If you pay the minimum amount, you can avoid the late payment fee.