- HOW IT WORKS?
- Credit Score & Report
- Credit Bureaus
Undoubtedly, Plastic money is one of the greatest inventions that helped in transforming the way money is used in the modern world. Plastic money made life simple and easy and plays a vital role in every aspect of our financial life. For example in terms of payments, purchases of goods and services and because of credit and debit cards, the security, transparency and clarity have increased to a greater extent.
Plastic money is the need of the hour and it paved the way to greater heights in its usage globally because of its simple and effective use. Though there are many evolutionary changes that underwent right from barter system till present, plastic money usage makes the transactions happen in just a few seconds.
Different Types of Cards Include
- Credit Card
- Debit Card
- Prepaid Card
- Commercial Card
- Food Card
1. Credit Cards
Credit card continues to be a top priority when it is a matter of using plastic money. From the bank, Credit Card allows the cardholder borrow funds on credit to make any purchases of goods and services or to make monetary transactions. Within the given period of time which is known as the grace period, the borrowed funds must be paid back. The borrowed amount will be charged interest if the cardholder fails to do the payment within the specified time along with the respective borrowed money.
If you are planning to apply for a credit card, the first aspect you have to check is the fees the credit card issuer is charging and also the benefits they are offering. Many credit card issuers charge late payment fee, annual membership fee etc. Added to this, they do charge interest on the outstanding bill amount. The simple and better way to avoid paying interest on your bill amount that is outstanding is to pay your bills on time. As your credit card payment is linked with your credit score you have to focus on paying your bills on time so that you will improve your credit score.
Types of Credit Cards
There are many numbers of financial institutions and banks that provide wide ranges of credit cards based on the needs and requirements of the customers. Each credit card is designed to serve the specific purpose of the customer, keeping in view fulfilling the individual requirements. Business, Premium, Gold, Platinum, Classic, Titanium are some of the common variants in credit cards. Each card is unique along with the type of services they provide.
Following Are Some of The Types of Credit Cards
- Co-branded credit cards: The card which is jointly sponsored by a retailer and by the bank is known as co-branded credit cards. In this type of cards, rebates and discounts are provided. Furthermore, these cards can also be used with merchants.
- Fuel & Auto Credit Cards: To provide discounts and cashback at refuelling stations, these cards are designed and can be used anywhere in fuel stations.
- Travel credit cards: In association with the travel partners, travel cards are introduced wherein the credit card holders can avail discounts on bookings via any travel booking sites.
- Entertainment credit cards: For booking on shows, movies, music, video games, sporting events, concerts etc. these cards are designed.
- Rewards credit cards/ Cashback: Reward points are provided on credit cards usage and it is one of the benefits for a credit card holder where he or she can earn points for the amount they spend.
- Credit Card for Women: Tailored specially for women, various financial institutions and banks have introduced this type of credit cards. Cash back, Reward points and discounts are provided on shopping like apparel stores, groceries at supermarkets, e-shopping etc.
- Lifestyle credit cards: These cards provide you with the rebate, cash back and exclusive discounts on travel, shopping, dining and on other activities related to leisure. Lifestyle credit cards are designed as per your choices related to leisure and accepted nationally and internationally and with the association with a particular merchant these cards are introduced.
Advantages of Credit Card
The need for carrying cash is greatly eliminated with the use of credit cards. Credit card usages are safe and simple and let us discuss some of its advantages.
- Best alternative to Cash: Globally, Credit Cards are popularly used and by replacing paper money, they offer high safety standards and are very easy to use.
- You can improve your Credit History: As your credit history is linked to your credit score, responsibly using your credit card can help to improve your credit score and this in turn helps you get credit easily with low interest rate at the times you need it.
- In the time of Emergencies: When it is a matter of unpredictable expenses and in any emergency credit card is of vital importance.
- Benefits: Credit card offers discounts, perks, reward points, rebates and many exciting offers at the time of signup.
- Globally accepted: Credit cards are recognised as one of the recognised means of payment and are widely accepted globally.
Service Charges & Fees for credit card
There are different types of service charges and fees which include
- Fees payable by the Cardmember on the Credit Card – There are fees like Renewal Fees and Annual Fees. The fee varies for each type of card and differs from one offer to another. At the time of applying, all charges and fees related to the type of credit card are communicated to the card member.
- Cash Advance Fees – In an emergency, if the Credit Cardmember uses the card to access cash, a transaction fee would be levied on the withdrawn amount and in the next statement; the card member would be billed.
- The interest-Free Period – Subject to the applicable scheme on the specific credit card, interest-free credit period could range from 20 to 50 days. From the date of the transaction, the charges related to financing and the cash advances are applicable, until the payment is made in Full.
- Charges – Fees and Charges are applicable from time to time and differ from bank to bank.
1. Late payment charges are applicable for credit cards if the customer fails to pay the minimum due amount.
2. If the customer uses exceeding the credit limit.
3. In the case of Balance Transfer, Balance Transfer Processing charges are applicable.
4. In the case of lost, damaged or stolen card certain amount would be charged for reissue.
5. Depending on the type of card and the transactions, the related to foreign currency would be charged.
6. Depending on the type of card, Petrol Transaction surcharge would be applicable on your credit card.
7. Apart from all, Service Tax charges are applicable from time to time.
8. At the monthly percentage rate on all transactions, finance charges are payable from transaction date, if card member choosing not pay his total balance in full.
2. Debit Cards
A banking instrument that is provided to the savings or current account holder and the electronic access in form of a card which can be used to buy products and services and also in making online transactions. Debit card holders use their cards to withdraw money via ATM and can make any offline/online purchases.
Debit Card can be used in a more secure and convenient way instead of carrying much cash. Furthermore, you can use your debit card for getting mini statements and for making balance enquiries. Recently a new card known as RuPay has been launched by the National Payments Corporation of India (NPCI).
Debit Card Advantages
- Simpler and alternative for Cash – It is simple to use Debit Cards and it is an excellent alternative for carrying cash. Furthermore, the transaction with a card is a quicker and simpler.
- Nominal Fee – Unlike credit cards which have a joining fee, yearly membership fee, Debit Cards carry no fee or a very nominal fee.
- Swift Transactions – With the help of debit cards, instant transactions can be made and when you are swiping the card for any payment it gets done only in just a minute.
- Keep You within Budget – Unlike Credit Card, you can access debit card as you can use your pre-available funds and it is easy to keep a control on your expenses and with SMS alerts you may get your balance status related to your transactions from time to time.
- Easy to procure – It is easy to procure Debit card with a few of documents only when compared to a credit card.
- Access to Cash Instantly – Debit Card provides instant access to cash.
Debit Card FAQ’s
1. Types of Debit Cards
- Maestro Debit Card
- Contactless Debit Card
- RuPay Debit Card
- Visa Debit Card Card
- MasterCard Debit Card
2. How does Credit Card Differ from Debit Card?
|S.No.||Criteria||Debit Card||Credit Card|
|2||Connection to any account
|Need to connected to savings account||Not required to be connected|
|3||Credit Score||No impact on your Credit Score||If unpaid there is an impact on linked with credit score|
|4||Interest charged||As no money is borrowed no interest is charged||If any unpaid, the interest is charged
3. Prepaid Card
This card is based on the concept of paying now and using at your convenience. An example of this concept is just like prepaid recharge cards related to mobile phones. The simple aspect of this card is that you have to buy this card, fill it with the amount that you desire and the card is ready for use. This Prepaid card can be used to pay at various payments related to merchants and e-commerce transactions. There is no credit history and no bank account needed for getting Prepaid Cards.
4. Commercial Card
This type of cards is designed for various commercial purposes of the businesses for example in identifying possibilities related to cost reduction and to optimise the business operations. Commercial Cards includes Corporate Cards, Business Card and Purchase Card.
5. Food Card
This type of cards are accepted at all Visa enabled Beverage and Food outlets in India. Furthermore, it has a convenience of free alerts related to Free SMS, Net Banking and Phone Banking.