Credit Card in India – Aug 2018

Last Updated 14th Aug 2018

Compare Credit Cards of SBI, HDFC, ICICI, Citibank, All Banks

Bank List of Popular Credit Cards
ICICI Bank Coral Card, Platinum Chip Credit Card
SBI Prime Card, BPCL SBI Card, SimplySAVE Card, IRCTC Platinum Card
HDFC Bank Freedom Card, Platinum Times Card, Titanium Times Card, Jet Privilege HDFC Bank World Card
Axis Bank My Zone Card
Citibank IndianOil Platinum Card, PremierMiles Card, Rewards Card, Cashback Card
Standard Chartered Bank Platinum Rewards Card, Super Value Titanium Card, Manhattan Platinum Card
HSBC Bank Visa Platinum Card, MMT Platinum Card
  • Earn cashback or reward points each time you swipe your card
  • Can be used to build credit worthiness for loans in future
  • Use credit card to convert purchases in EMIs and reduce your burden of paying whole bill at one time
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Compare Best Credit Cards in India

Credit Card Interest Charge Per Month Joining Fee
Axis Bank 2.50% to 3.25% Nil to Rs. 10,000
ICICI Bank 2.49% to 3.50% Nil to Rs. 125,000
Citibank 3.10% to 3.25% Nil
HSBC Bank 2.49% to 3.35% Nil
Standard Chartered Bank 3.10% to 3.49% Nil to Rs. 5,000
SBI 2.25% to 3.35% Nil to Rs. 4,999
HDFC Bank 1.99% to 3.50% Nil to Rs. 10,000

What is a credit card?

In modern times, the volume and value of trade done online and through plastic money is on the rise. Credit Card is one such instrument issued by banks and NBFCs which allows you to make purchases on credit, up to a predefined credit limit. The credit card bills are later paid on a set date, each month. It comes as a plastic card which is swiped on point of sale terminals placed at the merchant establishment (such as a shopkeeper). It is a convenient alternative for cash or cheque and makes transactions easy.

Credit cards come with different features and benefits. The most popular credit card offers include entertainment credit cards, fuel credit cards, cash-back credit cards, student credit cards, women credit cards, travel credit cards, business credit card, and low interest credit cards, among others. Many banks also offer free credit cards to its account holders, which do not have any joining fee or annual fee.

When should you use a credit card?

A credit card is one of the most important financial inventions in modern times. It allows a card holder to purchase goods and services on credit and pay it back over time. In addition, there are several credit card benefits over other modes of payments and of course, it eliminates the need for you to carry cash everywhere. If you are judicious enough in using a credit card, you also stand to benefit monetarily. Some of the benefits of using credit cards have been listed below.

  • To build your credit score: Disciplined swiping of a credit card can help improve your credit score. Reason being, Credit card companies will report your payment activity to the credit bureaus. Moreover, unlike other credit facilities, using a credit card doesn't involve interest cost as long as total bills are paid by the due date. Hence, frequent payment on credit cards and timely repayment of dues will help improve and build your credit score faster.
  • To avail instant loan: Loans against credit cards are pre-approved loans offered to the existing cardholders with a good credit score. Credit Cards offer the option to convert your purchases in Credit Card EMIs which can be paid during a pre agreed loan tenure. The advantage of pre-approved loans is that they have the fastest time when compared to other loans. You do not need any additional documents, like that in personal loan where some of level of documentation is required. The interest rates of loans against credit cards usually start from 11.50% per annum onwards and their tenure can go up to five years.
  • To earn cashback and reward points: Credit cards offer attractive reward points, cashback, and discounts. These cashback and discounts reduce your cost of purchases. On the other hand, reward points can be redeemed for goods or services from partner stores. Hence, more transactions through your credit cards will help you earn more such benefits.
  • To save money on grocery shopping: For many people, grocery shopping is a task which is done on a regular basis and therefore, using a credit card is the best option available. Many credit cards have been affiliated with supermarkets, which mean you can earn cashback or discounts on your everyday shopping. The more you spend, the more you can earn - so for big families, this could be a particularly good reason to use a credit card.
  • To cut the cost of existing debts:The main advantage of using a credit card is that it helps you get out of the vicious cycle of debt that only grows worse over time because of compounding interest rates. If you owe money on an existing credit card, you have the option to reduce the cost by transferring the outstanding balance to a credit card with a lower interest rate.
  • To plan an international trip: If you are planning an overseas trip, using a credit card has multiple benefits. Nowadays, international credit cards offer low or no foreign currency transaction fee. Also, some cards offer international customer assistance which is helpful during your much-awaited trip. Plus, a lot of travel-oriented credit cards offer special discounts on flight tickets, car rentals, hotel bookings, etc.
  • To earn free travels and hotel stays: Hotel credit card offer rewards and perks on hotel stays. You can redeem the points for a free flight or a free hotel stay. You can make the best use of free amenities for an exotic vacation or weekend getaway.
  • Helps to save time: A credit card eliminates the need for you to carry cash everywhere. It also avoids the trouble of searching for ATMs and in turn, saves your time of visiting them.
  • To track your expenses: Credit cards help you to keep a track of your day-to-day expenses. Your statements include the name of the merchant, date of the transaction and amount spent. Some cards also provide the year-end summary that helps while paying taxes.

How to Apply for Credit Card Online?

If you planning to apply for a credit card, all you need is a good internet connection as today, you can apply and get credit card online in few simple steps.

Here are the steps to apply for a credit card online:

  • Visit your bank's website and click on credit card 'apply online' option.
  • Fill out the application form which contains your personal details such as name, date of birth, address, contact number, pan card number, etc.
  • Post that, you will get a call from a credit card representative of the bank, who will guide you through the entire application process.
  • Once approved, a representative from the bank will come to your house and collect the required documents.

Apart from applying for a credit card online, you also have the option to choose your credit card offline. You can visit the bank directly to apply for the credit card you need. Also, you will be required to provide important documents such as identity proof, pan card and address proof to the bank. Once the documentation is done, credit card processing takes 7-10 days to get the card delivered to the mentioned address.

Credit Card Eligibility

Credit Card Eligibility varies based the internal credit policies of the bank and the purpose for which the card is availed. Some of the basic credit card eligibility parameters include:

  • Applicant should be at least 18 years of age
  • Applicant should have a regular source of income either through salary, self-employment or own business
  • Applicant should have a savings account in his/ her name
  • Applicant should have a good credit score or CIBIL Score

Banks decided on the amount of credit card limit to be offered to the borrower based on the salary, company in which the borrower works as well as existing relationship of the borrower with the bank. Banks may also decide to offer zero annual fees and renewal fees credit cards to customers in high income category and a steady credit card usage track-record. Some banks may also begin by offering low credit card limit credit cards and decide to increase the same, once they see a consistent and disciplined track record on credit card usage.

Credit Card Interest Rates

The entire unpaid balance of your credit card bill is chargeable on the applicable credit card interest rate. Along with the outstanding balance, any new spending on the card will also be subject to interest, until the entire balance has been paid off. You should always compare credit card interest rates of banks to choose credit cards with lowest interest rate.

The interest rates for credit cards are stated as yearly rates. This is called the annual percentage rate (APR). Unlike interest rate, which refers only to the interest charged on a debt, APR is the combination of the interest rate and any other costs or fees involved in procuring the loan. This includes any additional costs associated with the transaction. Credit Card APR can vary between 24-36%. Defaulting or delaying credit card bill payments can lead to late penalty on the accumulated credit card debt, besides ruining your credit score.

Credit Card Payment

Credit cards run on a monthly billing cycle, which is defined as a period of time between billings. During the billing cycle, any purchases made by the card are recorded in your credit card statement. Then, at the end of the billing cycle, you are billed for the same purchases. Your next billing cycle will start with whatever balance was left unpaid at the end of the previous billing cycle. The billing cycle is followed by a grace period. Suppose your billing cycle is from 5th January to 4th February, and the due date is 20th February. This period, from 4th Feb to 20th Feb is the grace period that is generally offered on credit cards. Any purchases made during this period will be part of the next billing cycle. Credit card bills must be paid on time, i.e., before the grace period ends, after which the balance will be subject to interest. You can make online credit card payment by logging in to your net banking account.

How to get the best credit card?

With a plethora of credit card offers from multiple banks, it often becomes difficult to choose the right credit. Here are some steps to choose the best credit cards:

  • Check your credit score: Before applying for a credit card, you must check always check your credit score. If your credit score is low, increases the chances rejection of your credit card application or even if you get a credit card, it might come with low credit card limit and high interest rates. Therefore, it is important to track and maintain your CIBIL score continuously.
  • Compare interest rate or APR for different cards: Annual percentage rate (APR) or interest rate is the cost of borrowing on the card if you do not pay the outstanding bill by the due date. You can compare the APR for different cards and can choose the one with a lower interest rate.
  • Carefully analyze your spending habits: Most credit cards are aimed at certain type of customer segments by offering cash backs and benefits on specific type of transactions. For example: While fuel cards come with higher cash back on fuel transactions, travel cards offer air miles, lounge access at the airports and hotel stays. Similarly, some cards also offer up to 5% cash back on utility spends. Therefore, one must carefully analyze his/ her spending and then opt for a card offering maximum benefits.
  • Choose a higher credit limit: Credit limit refers to the maximum amount a credit card holder can withdraw without incurring any penalty. Exceeding this limit leads to an over-limit fee on the amount exceeded. A credit card issuer can increase or decrease the credit limit of existing cardholders based on a review of credit score and repayment history. Having a higher credit limit provides more flexibility to a customer to meet emergency expenses.
  • Compare joining bonuses and rewards: Many credit cards offer attractive joining bonuses and welcome benefits in the form of bonus reward points and vouchers. Also, check for the expiration date of your reward points. While some credit card issuers offer reward points for a period of 2-3 years, there are some whose reward points never expire. Therefore, take into account the monetary value of joining bonuses and expiry date as well while comparing the various credit card options.
  • Annual fees and penalties: Credit card issuers make money by charging fees every year on the card. Some of the important charges include - joining fee, annual fee, late payment fee, cash advance fee and rewards redemption fee. Therefore, always prefer a card whose benefits in the form of cash back, welcome vouchers, discounts or reward points outweigh the annual fee and joining fee. There are also penalty charges for paying your bill late or going over your credit limit. Hence, go for a card with a reasonable fee.

Debit Card vs. Credit Card, which is better?

Credit and debit cards or popularly known as plastic money have undoubtedly become the most popular cash alternative in the modern world. Be it a businessman or a salaried employee - most people nowadays carry at least one of these cards and use them for transactions like bill payments, grocery shopping, flight bookings, etc. While both the cards look similar in appearance, they function differently.

FAQs on Credit Card

What are Add on Credit Cards?

Add on credit card is an additional credit card issued under the original or primary card. This card can be issued to family members, spouse, parents and children of 18 years and above. Every credit card has a limited number of supplementary credit cards that can be issued, and each has the same credit limit. Primary credit card holder is responsible for paying the overall outstanding due of primary and supplementary card holder. In case the payments are not made before the due date, primary card holder will be liable to pay the interest charged.

What is billing cycle?

Billing cycle is the time period between billings in which your bill amount is calculated. Billing cycle may vary and can range from 25-40 days but can also be shorter or longer depending on your credit card. Suppose, your credit card bill generates on 7th of every month. The bill you get every month will contain all the expenses made on the previous month. Any purchase made on 8th of a month will be added to the next billing cycle.

What is grace period?

Grace period is the time period between the end date of billing cycle and your bill due date. In this period, you have to pay all your dues without having to pay any interest or late payment charges.

What are the precautions you need to take to prevent credit card fraud?

You have to follow the following precautions if you want to prevent your credit card from frauds -

  • Don't leave personal information such as your date of birth and password etc. lying around at home, in your vehicle or at work.
  • Choose a unique PIN and never share with anyone.
  • If you receive a replacement card, you must destroy the old one
  • If you don't receive a reissue or replacement by the time your card expires, contact your card issuer.
  • Don't share card information over the phone, or email to anyone, not even with the customer care.
  • Make sure that the website you are using is secure before transmitting the card information and keep anti-virus and anti-spyware systems up to date.
  • Notify the card company when you are going away on a trip. That way they will monitor the use of your card for any suspicious activity while you are away.
What are the other terms and conditions that you should be aware of while availing a credit card?

We always advise our customers to read the fine print of the loan agreement before signing it. Some of the indicative terms that should be checked are:

  • Annual fees in the first year and at the time of renewal, especially if you opted for a discounted or no annual fee card. Get a written commitment that in case of zero annual fees credit cards.
  • Late payment charges in case you do not pay the minimum amount due before the due date.
  • Interest rate on the balance outstanding on the credit card, in case you do not pay off your card bills.
  • Cash advance charges if you need to swipe your card at an ATM.
  • Charges for spending more than the prescribed credit limit.
  • Requirements of prescribing to add on insurance cover etc.
  • Other hidden late payment charges such as revocation of reward points and other benefits.
How does the card issuer determine your credit limit?

The prospective card issuer determines the credit and cash withdrawal limits of the card holder. These limits are communicated to the customer at the time of card delivery. Some key factors that may influence the decision of the card issuer include the credit score, income, past track record, company category you are working with as well as your existing relationship with the bank.

What are the documents required?
  • Bank Statement
  • Identity proof (Passport, PAN Card, Aadhaar Card)
  • Age proof (PAN Card, 10th and 12th marksheet)
  • Address proof (Electricity bill, Aadhaar Card, Driving License, Voter id)
  • Income Statement (last 3 months salary slip)
  • Last 3 years IT return (for self-employed only)
Credit Card News - Aug 2018
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