Credit cards are some of the most important payment tools today. But with multiple banks issuing dozens of different credit cards, how do you pick the right one for you? Don’t worry, we have you sorted. Read below for a guide on what a credit card is, how it helps you reap rewards and cashback, and how to select the best credit card suited to your needs. You will get all the information you need on credit cards in India.
List Of Top 10 Credit Cards In India
|Credit Cards||Joining Fees||Best value on|
|Flipkart Axis Bank||Rs 500||Flipkart|
|Amazon Pay ICICI||0||Amazon|
|Axis Bank ACE||Rs 500||Utility bill payments|
|SBI SimplyCLICK||Rs 500||Amazon, online spends|
|HDFC Bank Millennia||Rs 1,000||Offline spends, wallet reloads|
|HSBC Platinum Visa||0||International lounge access|
|IDFC First Bank Select||0||Lifestyle benefits|
|SBI SimplySAVE||Rs 500||Offline spends|
|American Express Membership Rewards||Rs 1,500||Reward returns, wallet reloads|
|SBI Prime||Rs 2,999||Utility bill payments|
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What Is Credit Card?
A credit card is one financial instrument that is powerful when used properly. Essentially, a credit card is a sort of unsecured loan that a bank offers you in the form of a physical or virtual card (some banks offer secured cards too). Available in metal or plastic form factors, these credit cards usually come with a monthly credit limit, of say Rs 10,000, which indicates the amount of debt you can take from the bank given you repay it within 10-20 days (due date) after the 30-day billing cycle.
What are the advantages of a Credit Card?
Cashback in the form of cash or reward points or air miles is the ultimate benefit of holding a credit card. Most cards offer some sort of cashback or points on every purchase. While the super premium ones might offer higher cashback, others would offer lower percentages of cashback to users. There are some exceptions in the entry-level segment, like Amazon Pay ICICI and Flipkart Axis, that offer segment-leading cashback to the tune of 5% on certain transactions.
2. Welcome/ Renewal Offers
Another great part about owning a credit card is the welcome and/or renewal benefits that it offers. In a bid to attract customers, credit card issuers usually give you free cashback, gift vouchers, complimentary subscriptions, and more goodies on successful application. They also offer certain rewards on milestones and yearly fee renewals to keep customers using their cards. For instance, the SBI SimplyClick has a joining fee of Rs 500, and users get a Rs 500 Amazon gift voucher, making the card virtually free (excluding GST).
3. Airport/ Railway Lounge Access
You might have seen premium lounges at airport terminals and railway stations. These lounges can be accessed using multiple credit cards, at the behest of the lounge company. Credit cards will usually advertise lounge access as a perk. You can then take the card to the lounge, swipe it for a very nominal fee of less than Rs 50, and access the sitting area, alongside food and drinks.
4. Fraud Protection
A great, largely underrated use case of credit cards is the element of fraud protection. All payments on your credit card are insured by the issuer bank to an extent and time period. For instance, in case there is a fraud transaction on your credit card, you can intimate the bank immediately. The transaction will likely be blocked and the issue resolved within a reasonable amount of time.
5. Interest-free Credit Period
Another awesome benefit of keeping a credit card is the interest-free credit period, which you can theoretically avail up to 50 days depending on the card and bank. Consider you make a big purchase on the 1st of a month; something that you are not able to pay before your next month’s income comes in, and the credit card bill arrives on the last day of the month. You get 30 days of free credit, along with an additional 10-20 days to pay off the credit card bill before you start incurring any sort of interest.
What are the disadvantages of a Credit Card?
1. High interest rates
High interest rates are a big disadvantage of credit cards, but only if you fail to pay the due amount in the prescribed time period. Some banks are notorious for charging you interest rates up to 50% per year (!!) in case you are not able to make the payment when it’s due. The interest is charged pro rata from the day following the due date.
2. Annual fees
Annual and renewal fees are another disadvantage of credit cards, which is when you are not able to utilize the benefits truly. Because usually with steep fees, cards will offer benefits and offers that will more than make up for the cost incurred.
3. Risk of credit score damage
The point of paying high interest rates and risking your credit score is linked to the condition that you are not able to repay your debt in time. In case of credit card default, you risk reducing your credit score by a lot, which can take months if not years to recover.
4. Possible overspending
If you are not financially disciplined, you will end up overspending and then not being able to pay back the loaned amount. This can lead to a situation termed debt trap.
All in all, credit cards are powerful tools to extract value, both monetary and non-monetary. All it asks for you is to have financial discipline and restraint over overspending. If you can do that, you can reap rewards in no time.
Benefits of Applying for a New Credit Card Through BankKaro
BankKaro is one of the leading credit card aggregators in India. We offer you the best credit cards with real Cashback, free credit score check, exclusive gift vouchers, and a holistic view of information from the world of finance. Benefits of applying for your next credit card through BankKaro are manifold. Let’s understand:
Get Real Cashback
Only BankKaro offers you REAL Cashback on every successful credit card approval. Yes, you get free money when you apply for your next credit card. This Cashback can be transferred into your bank account or be taken in the form of Amazon.in gift vouchers. Magical, isn’t it?
Exclusive Gift Vouchers
Not just Cashback; you can also get access to thousands of rupees worth of gift vouchers across brands like Ajio, Lenskart, Mamaearth, and more. To unlock these, just complete your profile, submit your details, and start using them on your favourite websites.
Free Credit Score
Apart from real cashback and gift vouchers, you can access your CRIF credit score for free! Every month you can refresh your score for free with BankKaro and get access to the latest credit card cashback offers running at the time.
It’s only beneficial for you when you sign up with BankKaro!
Types of Credit Cards
Before we dig deep into the various types of credit cards and which offerings are segment leaders, you can read our overall list of best credit cards in India right now. Now, moving on to the various types.
1. Cashback Credit Cards
Cashback is one of the countless benefits a credit card can offer to anyone. You are getting rewarded for every dime you spend with real cash in the form of statement credit or reward points, and this is what credit cards offer to you. There is a diverse group of cashback credit cards in India. Countless choices might confuse you as to which one to choose. You will get your answers as we have compiled a list of the best cashback credit cards in India for you to choose from.
2. Credit Cards for Reward Points
Another big benefit that credit cards offer is reward points. Most banks will offer you certain points on all regular purchases, while some might run campaigns with accelerated rewards on certain categories like online shopping, travel bookings, etc. These reward points can usually, then, be converted into cash, tickets, or products at preset rates.
3. Lifetime Free Credit Cards
Because of the high level of convenience and benefits, credit cards are prevalent. They come with a lot of charges, which can be a burden for a lot of users. However, some of the banks and institutions issue some of the best lifetime free credit cards as well. These cards usually come with no joining fees and no annual fees, or annual fees with comfortable waivers.
4. Students Credit Cards
Credit cards for students are essentially those cards that are entry-level in nature and targeted towards college students. These credit cards are beneficial in building your credit score at an early age, learning financial discipline, and minting rewards and benefits while in college. A student credit card in India can only be issued to an Indian citizen above the age of 18 years.
5. First Credit Cards
Do you not have a credit score? Want to get your first credit card? It’s usually a good idea to apply for credit cards that have relatively easier chances of success.
6. Railway and Airport Lounge Access Credit Cards
Travelling is bliss and an expensive affair at the same time. Hours of waiting at railway stations or airports, ensuring that you have everything you need and with people running around; all this sounds like the perfect recipe for a disastrous experience. Fortunately, we have credit cards. The best way to escape such a nightmare is to have a credit card that can provide you with complimentary lounge access.
7. Business Credit Cards
While certainly limited in number, some credit cards are made only for business owners. Not to be confused with corporate cards, business credit cards are made for small and medium enterprises along with those running bigger businesses too. The main purpose of business credit cards is for users to keep their personal and professional card accounts separate.
8. Premium Credit Cards
In case you want cards which offer distinguished benefits and rewards, entry-level options simply don’t cut it. You need a premium card that is usually defined by a high annual fee, accelerated rewards, exclusive benefits and access, subscriptions, and memberships.
9. Secured Credit Cards
A secured credit card is a good option for when you have no or very low credit and want to build your credit score for future borrowings. Secured credit cards are usually issued by banks and other finance companies against a money deposit such as FD. You can open up a fixed deposit with the issuer and procure a secured credit card in return.
10. Credit Cards Against Fixed Deposit (FD)
The best credit cards against fixed deposit are same as secured credit cards. You need to open a money deposit with the issuer and you can get a credit card with about 70-85% of the deposit amount as monthly limit.
11. Credit Cards with Lowest Interest Rate
Interest rate is one of the most significant charges incurred if you miss repaying on your credit card. There are, however, some credit card issuers that offer low interest rates, which could be a benefit for some. In fact, we have compiled a list of the lowest credit card interest rate in India for your convenience.
12. Fuel Credit Cards
Fuel credit cards are those that offer you maximum rewards and benefits on your fuel costs. In case you are someone with heavy personal car usage, a fuel credit card might make sense for those additional benefits.
13. Credit Cards for Online Shopping
For a lot of you, online shopping might be the biggest spending you do on your credit card. Fortunately, there are certain cards that offer accelerated and specific benefits/ cashback when you shop on online platforms including Flipkart, Amazon, Myntra, Ajio, and more. These best credit cards for online shopping get you discounts on specific portals as well as across platforms.
14. Super Premium Credit Cards
The most elite category of credit cards come under the super premium segment. These are the credit cards with the best rewards, alongside the highest annual fees, reward rates, and luxury benefits. All in all, these are the diamonds of the credit card world, limited to select few with high eligibility criteria.
Credit Cards Eligibility Criteria
1. Income group
One of the most important criteria on which credit cards are issued is your income group. While most banks ask for a basic minimum monthly income of around Rs 25,000-30,000, it can go up to multiple lakhs per month in the case of certain super premium credit cards. Make sure you check thoroughly before applying.
2. Age group
Age is another factor that might affect your credit card application. While a lot of banks and issuers ask for a minimum age of 21 years, some might relax it to 18 years for college students and freshers.
3. Credit score
Your credit score is considered when you submit your application for a new credit card. While it is not mentioned explicitly to the customer before application, the basic rule of thumb suggests the premium the credit card the higher is the credit score ask.
4. Location serviceability
Even if you satisfy income, age, and credit score requirements, your application might still be subject to pincode serviceability especially if you live in a remote part of India. Every bank has its own set of pincodes that it services, and you can be filtered during the application process itself.
There are certain super premium and exclusive credit cards that are subject to another eligibility criteria, apart from the above. This is the criteria of obtaining an invite from the bank or another customer with the same credit card. There are usually no set rules behind obtaining the invite, however it could be based on high spending, high credit limits, and solid repayment and account history.
Documents Required for Credit Cards
While every bank and issuer will require a different set of documents to process your application, here is a general list of documents that are accepted across banks.
For Indian Residents
- PAN Card
- Aadhaar Card
- Driving Licence
- Voter ID Card
- Driving Licence
- Ration Card
- Electricity Bill
- Voter ID Card
- Telephone Bill
- Bank statement
- Latest salary payslips
- Income Tax Return (ITR)
- Form 16
- PAN Card
- Proof of business continuity
- Birth Certificate
- 10th Standard School Certificate
- Voter ID Card
- Driving Licence
- Driving Licence
- Electricity Bill
- Voter ID Card
- Telephone Bill
- Bank statement
- Rental agreement
- Lease/ title deeds
Top Banks issuing Credit Cards
1. HDFC Bank
HDFC Bank is the biggest issuer of credit cards in India. As per the latest data, HDFC has around 24% market share, which means almost 1 in every 4 credit cards is issued by HDFC Bank. In the entry-level segment, the bank offers cards including the Millennia, MoneyBack, and IndianOil fuel. You get popular options like Regalia and Diners Club Miles in the mid-range, and names like Infinia and Diners Black in the premium category.
2. SBI Card
SBI Card is another big player in terms of credit cards in the Indian market. An entity separate from State Bank of India, SBI Card still has the benefit of millions of bank accounts and high serviceability to bring exciting value credit cards to masses. Its SimplyClick and SimplySave are ultra-popular in the basic credit card segment, while the Elite and Prime take the cake in the premium segment with offerings that excite value-seeking customers.
3. ICICI Bank
ICICI Bank is one of the biggest private players in the banking industry in India. This shows with its stronghold in the credit card industry also, where the player ranks on #3 in terms of total credit cards issued. The marquee offering by the bank is the Amazon Pay ICICI credit card, which has registered 2 million customers making it the most popular credit card in India.
4. Axis Bank
Axis Bank is another big private bank in India. The company offers a plethora of credit cards ranging from entry-level options like Axis ACE to super premium cards like the Axis Magnus and Select. Axis is one of the biggest players in the market and is gaining market share with its popular cards that are attracting customers every day.
5. American Express
American Express is one of the premium credit card players in India. Currently paused due to guideline violation, American Express is known for its premium cards, top notch customer service, and exclusive benefits and access. Its metal card – Platinum – is popular for its elite category and limited access partnerships.
6. Interest Rates on Credit Cards
Credit cards are unsecured loans in essence. Thus, they attract high interest rates. In fact, a lot of credit cards in India have APR or annual percentage rates ranging from 30% to even 50%! This means that missing out on repayments can be quite the hassle for a credit card holder.
We recommend not going over your affordability with your credit card spends. However, in case there is an unavoidable expense, a better way to manage it would be by converting it into a personal loan that usually attracts interest rates of less than 20% per annum. This can be done by requesting the issuer bank once you have debt in your account.
Fees and Charges on Credit Cards
There are several kinds of fees and charges that are associated with getting a credit card in India. Let’s list them down and understand what each one is, how it is levied, and how to avoid as many as possible.
The basics begin when you get the card in your hand. The first charge you will incur is the joining fees you pay for your credit card. While some of the entry-level cards in the market come with waived off joining fees, others come with a nominal fee of Rs 500-1,000. And a lot of those cards offer you gift vouchers equivalent to the value of the joining fees, excluding taxes of course. Premium card joining fees go well into the thousands.
Renewal/ Annual Fees
Some credit cards also come with a renewal fee, apart from joining fee, which is to be paid on an annual basis. In most cases, this is the same amount as the joining fee. For example, the Axis Flipkart credit card has a joining fee of Rs 499 and the annual fee is also Rs 499.
To offset this cost, the credit card issuer offers a feature called fee waiver. Most companies offer you a milestone spending value, over which renewal fee is waived off. In the case of the Axis Flipkart card, it is Rs 2,00,000 in the entire year.
Interest Rate/ Finance Charges
Probably the most complex and expensive charge in a credit card is the interest rate or finance charge or Annual Percentage Rate (APR). The interest rate is the money you have to shell out if you do not pay your credit card bill in time. For some credit cards, this amount is as high as 4% per month or around 50% per annum!
Fret not, you can avoid this charge completely by paying your credit card bill before the due date. It’s not that tough, really.
Card Replacement Charges
Card replacement fee is one insignificant yet noteworthy charge as part of owning a credit card. In the scenario where you lose your credit card or it gets stolen and subsequently blocked, the bank issues a replacement card. For a lot of cards, this is usually waived off by the bank or issuer. However, in certain cases it can range from a one-time fees of Rs 100-500 especially in the entry-level range.
Foreign Transaction Fees
In case you are making a transaction through a foreign vendor, in any other country, a percentage is charged on the transaction. This is levied on all debit as well as credit cards. While some good premium cards offer rates as low as 1-2%, others can range from between 3-5% of the transaction amount.
Reward Redemption Charges
This is one of the least important charges considering it isn’t even levied by a lot of banks. Some banks including SBI and HDFC might charge you a nominal amount of ~Rs 100 when you redeem your reward points for cash, travel bookings, or products.
Cash Withdrawal Charges
Not many know this, but a credit card can be used to withdraw cash from an ATM, as per prescribed monthly limits. However, this doesn’t come without charges. A cash withdrawal fee is usually charged by several banks to discourage converting credit card limits to cash.
Late Payment Charges
Obviously, a credit card is charge-free given you make all due payments before the date provided each month. In case you go beyond the due date, you need to pay interest charges apart from a late payment fee that some banks might charge you. This is usually a one-time fixed fee that could range anywhere from Rs 500-5,000 depending on type of card, amount due, and issuer bank.
BankKaro’s Credit Card Reviews
Flipkart Axis Cashback Credit Card Review
Flipkart Axis credit card is one of the hottest cards in the Indian market right now, and for all the good reasons. Launched in partnership with ecommerce giant Flipkart, this Axis credit card offers you unlimited 5% cashback on Flipkart and Flipkart entities (Myntra, 2GUD). That’s not all; you also get an enviable 4% cashback on on preferred merchants, and some more on all other spends. Here is our review of the Flipkart Axis credit card, where we dive deep into the pros, cons, rewards, cashback, and more.
HDFC Millennia Credit Card Review
HDFC Millennia is one of HDFC Bank’s most rewarding credit cards on offer. If a cashback card is on your mind, HDFC offers a great option with the Millennia, which is fast becoming one of its most issued credit cards. Here is our review of the HDFC Millennia credit card, where we delve deep into the pros, cons, rewards, cashback, and more. We attempt to answer the question of whether you should get one for yourself or not?
SBI SimplyCLICK Credit Card Review
What if I say you can get the most benefits with a credit card and earn rewards every time you shop online? You will earn some cashback and additional rewards for shopping online. Here is our review of the SBI SimplyCLICK credit card. Is it the perfect choice for every online shopper? Let’s find out.
Tips and Tricks for Credit Cards
- If your credit score is low, go for a secured credit card (against fixed deposit) to build credit history
- Track your credit score regularly to weed out discrepancies
- Set credit card limits based on your income or disposable cash
- Keep track of bill due dates and pay the full amount to avoid high interest charges and credit score hit
- Cut down on unnecessary expenditure; spend only what you can afford to pay instantly
- Before you apply for a credit card, always note your most frequented purchase categories and pick a card that offers highest rewards on that category
- Aim to stay under 30% of your credit limit
- Keep track of the rewards that accrue on your account and make sure to redeem them effectively
- Know all the fees related with your credit card and ensure that you avoid as many as possible