The credit card market has witnessed a significant growth in recent years owing to a growing demand for the financial tool. As per data released by the RBI, the total number of credit cards outstanding has drastically increased in the last decade. Such a massive increase indicates the growing popularity of these cards. To make the handy financial instruments more useful for individuals, lending institutions are also offering various types of credit cards to attract a broader user base.
Hence, one must gain a comprehensive idea regarding the difference in utilization behavior among various types of credit card available in the market before applying for one that suits their financial needs.
Utilization behavior for different types of credit cards – A look
To make the most of the features and benefits offered on credit cards, individuals should opt for cards that suit their spending habits. For instance, an individual who travels frequently can consider opting for a travel credit card to avail discounts on ticket and hotel bookings, frequent flyer miles, and the likes.
Furthermore, one should also opt for a credit card according to his/her financial standing to receive quick approval. For instance, an individual with a low credit score should apply for a secured credit card that relies more on the collateral offered than the applicant’s profile.
Given below are some common types of credit card and the difference in their utilization behavior –
Lifestyle credit cards
It is one of the most popular types of credit card available in India. With such cards, one can quickly meet all the lifestyle-related requirements such as shopping, travel, entertainment, movie, etc. Moreover, individuals can also avail lucrative reward points on their purchase of lifestyle products and services. Subsequently, they should know how to redeem their credit card reward points to earn cashbacks and vouchers on shopping, dining, movie tickets, etc., facilitating individuals to save substantially.
A lifestyle credit cardholder can also avail significant benefits on travel and fuel purchase. For instance, vehicle owners using their vehicle for daily commute can apply for cards like the fuel credit card, which offers fuel surcharge waiver and cashbacks on purchases from partner gas stations.
Financial institutions also provide pre-approved offers on credit card applications to accelerate the procedure and help save time. Apart from credit cards, such offers can also be availed on a variety of credit products like business loans, personal loans, etc. One can check his/her pre-approved offer by entering the name and contact information.
Business/corporate credit card
These credit cards are designed to meet the financial requirements of Individuals working in business or corporate workspace. However, a corporate credit card is issued in the name of the entity which is responsible for repayment irrespective of who is authorized to use the card.
Contrarily, a business credit card is extended to the business owner or an employee who is liable to pay the due amount individually. Such credit cards not only help businesses to keep track of their expenses but also enable them to avail significant discounts on purchases.
Secured credit cards
Secured credit cards are ideal for individuals with poor or no prior credit history. These types of credit cards are offered against collateral such as fixed deposits. The credit limit extended by financial institutions on the card will be subject to the value of the deposit or investment collateralized.
Individuals should always try to pay secured credit card bills in time to build a healthy credit history. It will enable them to upgrade to traditional unsecured cards in the future easily for accelerated benefits. Therefore, they must know about some of the convenient options to pay their credit card bills and take measures accordingly.
Student credit card
A revolving line of credit is also available for students requiring finance to pursue their higher education via a student credit card. Such cards enable pupils to meet all their educational expenses easily and also help them learn how to handle credit responsibly from an early age for a healthy credit score over time.
A pupil can easily qualify for a student credit card since the eligibility parameters regarding income source are more lenient compared to regular cards.
Apart from these types, other types of credit cards are available too, like balance transfer cards, premium cards and cards for women that one can consider. Individuals can also consider applying for a Super Card that offers a host of features like cash-free ATM withdrawal, conversion to EMI, robust security features, etc.
However, before continuing with the procedure for their suitable credit card application, individuals should go through the eligibility criteria set by their lending institutions to ensure that they satisfy all the parameters. It will aid them to qualify quickly for the best type of credit card they require.