Credit Cards in India: Definition, Types, Advantages, and Disadvantages

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Credit card issuers assign funds to your name, which becomes your credit limit, by checking your credit score. Also known as your CIBIL score, this number is a reflection of your financial history and gives issuers an insight into your income, existing debt and ability to manage credit.

While credit cards can be used for any transaction, given it is within your credit limit, they are segregated by type. These types exist based on the card’s USP be it perks or partnerships with other entities. Here are a few of the most popular types of credit cards you can apply for.

Auto/Fuel credit card

This type of credit card is especially beneficial to vehicle owners. By using it at designated fuel stations across India you can unlock cashback offers and earn surcharge waivers in addition to regular rewards points. When redeemed, these points allow you to refuel at a lower cost.

Co-branded credit card

This type of credit card allows you to enjoy the privileges from the brand associated with the issuing bank or NBFC. These partnerships are generally carried out with retail entities both offline and online. As a result, you can enjoy exclusive discounts and benefits in the form of ticket booking privileges, hotel accommodation offers, customised travel packages and more.

Lifestyle credit card

This one is designed to cater to different lifestyles and incomes. It offers value-added benefits in the form of cashbacks, waivers and offers on movie and flight tickets, insurance, and a range of other lifestyle expenses such as fine dining and shopping.

Other cards you may come across are rewards, balance transfer, business, entertainment and travel credit cards. Now that you understand what is a credit card and know of the different types of credit cards, take a look at how a credit card helps you.

Increased purchasing power

Issuers assign a generous credit limit to you, using which you can make a range of big-ticket purchases conveniently. For example, to combat the rising temperatures you may want to purchase an AC. To make this purchase affordably, you can use a credit card such as the Bajaj Finserv RBL Bank SuperCard. It allows you to buy the AC without saving first, and you can also split the cost into No Cost EMIs. This reduces the strain on your finances and gives your purchasing power a boost.

State of the art security measures

Credit cards are now among the safest ways of transacting because they have in-built security features such as 2-factor authentication and an EMV chip. Furthermore, in case the security system is circumvented, certain credit card issuers offer you a zero-liability fraud cover to limit any damages you may incur. The Bajaj Finserv RBL Bank SuperCard, for example, lets you take full control of your credit card through its in-hand security feature. Through it you can take action whenever you sense trouble.

Reward points and perks to help you save more

Credit cards are known for the rewards and perks they offer. Based on the type of credit card you use, you can earn rewards and avail exclusive offers too. For example, travel credit cards offer air miles and fuel credit cards make this expensive commodity more economical.

Emergency loans and ATM withdrawals

Having funds in an emergency is of utmost importance and the SuperCard accounts for this by letting you avail an emergency loan. The process is simple and the issuer converts your credit limit into a personal loan on your request. The loan is interest-free for 90 days and easily payable in 3 affordable EMIs thereafter. Furthermore, you can also withdraw cash from ATMs using your SuperCard whenever you find yourself in a cash crunch. This transaction attracts no interest for up to 50 days.

While there are ample advantages you can enjoy when using a credit card, here are a few things to be aware of.

Spend cautiously

While credit cards boost purchasing power, it is just as easy to overspend. You need to be cautious with how you use your credit card as it is easy to get carried away and find yourself in debt.

Be cognizant of fees

With a creditcard, you’re using borrowed funds that you must repay on time. If you don’t, a bevy of charges and penalties may be applicable. Paying such charges or accumulating them over months will negate the purpose of taking a credit card and land you in debt.

After thoroughly understanding the different aspects of credit cards, it is safe to say that if used properly, it is a very powerful financial tool. When you’re in the market for a credit card, ensure you choose an issuer that gives you ample benefits.

The Bajaj Finserv RBL Bank SuperCard is one such option that encompasses the benefits of 4 cards in 1, serving as a credit card, cash card, loan card, and an EMI card. Additionally, you can convert any purchase over Rs.3,000 into easy EMIs and make big-ticket expenses affordable. To avail this credit card immediately, simply check your pre-approved offer and apply.

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