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What are the various types of credit and debit cards available in India?

A credit card is a card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services. The issuer of the card grants a line of credit to the consumer from which the user can borrow money for payment to a merchant or as a cash advance the user. Most credit cards are issued by local banks or credit unions and are the shape and size specified by the standard. Credit cards are issued after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card. When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates consent to pay by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a (PIN). Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a Cardholder Not Present (CNP) transaction.

Types of Credit Card

In Indian credit card market there are a number of credit cards being provided by banks and financial institutions. These cards give a wide selection of financial profit to holders. Following are a variety of credit cards available in India :

  • Co-branded credit card
  • Cash Back Credit Cards
  • Business Credit Cards
  • Student Credit Cards
  • Balance transfer credit card
  • Airline credit card
  • Silver credit card
  • Gold credit card
  • Platinum Credit Card

Co-branded credit card

Visa or MasterCard credit card together sponsored by a bank and retail merchant such as a department store. Co-branded cards can be issued at less cost than conventional retail private label cards and give issuing banks admission to new customers. Cardholders may be given incentives such as discounts on merchandise, rebates or discounts off purchases. A co-branded card has a tie-in with a specific merchant rather than an association or professional group.

Cash Back Credit Cards

Several credit cards will now offer you cash back incentives for using their credit cards. Depending on how much your balance is and how often you use the credit card, you can earn cash back for your purchase.

Business Credit Cards

A business credit card offers the business owner the opportunity to keep business and individual expenses separate. The credit card may suggest special business rewards and saving opportunity that go above and away from what the individual credit card owner may have. Since money management is necessary in effectively running a business, the card may offer an expense management service that will allow you to keep path of the outgoing money. You can attain additional credit cards for employees who may need them for travel expenses and such as well as have a higher credit border than you normally would on an individual credit card.

Student Credit Cards

Numerous credit card companies will issue student credit cards that have lower credit limits and fewer incentives to help remain their spending in check. Still, take note. Many college students graduate with a credit balance that averages between 3,000 and 7,000 and with interest rates; this can be a real problem when trying to pay them off.

Balance transfer credit card

A balance transfer credit card is one in which you can transfer some of your debts and pay the sum off at a 0% interest rate for a set period of usually between six and 14 months.

Airline credit card

Airline credit cards that earn reward miles for discounted or free flights are a must have if you are a frequent flyer. Earning these valuable benefits can save a small fortune or free upgrades for your travel needs.

Silver credit card

Silver credit cards have been around since the beginning of credit cards in the mid-1950s. Today silver cards have been surpassed in prestige by gold credit cards and platinum credit cards and so have more normally come to be known as standard or basic credit cards.

Gold credit card

A gold-colored credit card, generally issued to customers with above average incomes, that may include additional benefits, for example, an overdraft at an advantageous interest rate, and may have an annual fee.

Platinum Credit Card

Platinum credit cards are generally offered to those individuals with good credit ratings and very high income. Platinum credit cards have many benefits and features compared to a silver or gold credit card. Conventional school of thought would find platinum credit cards to be a status symbol. However, relaxed rules and upper limits have brought them within reach of the average person too.

Advantages of Credit Card

  • They allow you to make purchases on credit without carrying around a lot of cash.
  • They allow accurate record-keeping by consolidating purchases into a single statement.
  • They allow convenient remote purchasing - ordering/shopping online or by phone. They allow you to pay for large purchases in small, monthly installments.
  • Under certain circumstances, they allow you to withhold payment for merchandise which proves defective.
  • They are cheaper for short-term borrowing - interest is only paid on the remaining debt, not the full loan amount.
  • Many cards offer additional benefits such as additional insurance cover on purchases, cash back, air miles and discounts on holidays.

Disadvantages of Credit Card

  • You may become an impulsive buyer and tend to overspend because of the ease of using credit cards. Cards can persuade the purchasing of goods and services you cannot really afford.
  • Credit cards are a relatively expensive way of obtaining credit if you don't use them carefully, especially because of the high interest rates and other costs.
  • Lost or stolen cards may result in some unwanted expense and inconvenience.
  • The use of a large number of credit cards can get you even further into debt.
  • Using a credit card, especially remotely, introduces an element of risk as the card details may fall into the wrong hands resulting in fraudulent purchases on the card. Fraudulent or unauthorized charges may take months to dispute, investigate, and resolve.

Tips for selecting the right Credit Card

Decided to go in for a credit card? But do not know how to select? The explosion of cards in the market would simply confuse you while choosing a card. You can, of course, choose to move with whatever comes your way, or whatever your friend recommends, but you at least need some tips and tricks that could help you to get a better card. Following are the things to be considered while choosing a credit card.

  • Go through the joining fee and annual fee
  • Move on the Add-on card fee
  • Interest rate
  • Is it a Global card or what?
  • Lost card liability
  • Is immediate cash withdrawal possible
  • We can be in the free credit period
  • Do you have a Helpline.

Debit Card

It is also popularly known, as ATM card. The Debit Card gives you the liberty to access your Savings or Current Account at merchant locations and ATMs. Whenever you make payments, the amount will be instantly debited to your account. There are around more than 5.3 lakh Visa/PLUS ATMs and equally strong MasterCard/ Cirrus ATMs in over 140 countries worldwide. All your purchases and cash withdrawals will be in the currency of the country you are in, while your account will be debited in rupees. So you needn't carry traveler’s cheques or foreign exchange the next time you travel.

Major types of debit card

  • Debit master card
  • Prepaid Cards

Debit Master Card

Debit Master Card is a debit card with the Master Card logo embossed on it. The Debit MasterCard market is regularly gaining ground snatching away market stakes from visa. In an effort to target higher income groups Visa is losing considerable market stake to MasterCard. Debit MasterCard has made itself obtainable to common men and women all over the world irrespective of which income strata they fall into. The Debit MasterCard is used as an option method of payment. Everyday small retail transactions can also be performed with the help of Debit MasterCard.

Prepaid Debit Card

A prepaid debit card is a reloadable debit card which allows the card holder to spend only to the extent of the amount of cash pre deposit in the account. The primary necessary in using a prepaid debit card is one should fill cash into the prepaid debit card. The process of filling cash into a prepaid debit card is the same as filling currencies to the prepaid mobile card. In order to use a prepaid debit card there should be sufficient balance in the account. This saves an individual from getting into debt because the individual is using his own money.

Tips for debit card holder

  • Never allow anyone else to use your card
  • Ensure that your card is signed on the signature panel as soon as you receive it
  • Never write down your PIN - remember it
  • Ensure that you get your card back after every purchase
  • Always check sales voucher slips including purchase amount when you sign them, try to keep copies of sales vouchers and ATM receipts.

Never give your card number over the phone or on the Net, if you are not dealing with a trustworthy company. Even though there are a number of credit cards in India you need to select only those cards which suit your needs. All credit cards are not suitable for all purposes. Also make sure that you do not avail too many credit cards even though banks might offer them as too many credit cards ruin your credit score.

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