Banks all around the world offer a variety of loans. These loans are usually classified based on the needs of the people as well as the repayment period. Under the repayment period classification criteria, there are two major categories, namely, short-term and long-term loans. As the name suggests, a long-term loan has a longer repayment period compared to a short-term loan.
One of the most popular short-term loans taken up by people includes the loan taken over credit cards.
What are Credit Card Loans?
Credit cards are also known as a plastic currency. Using a credit card is as good as using cash money. The use of the credit, as well as debit cards, has increased in India over the past couple of years. With better financial infrastructure, every major, as well as minor shopping centre, now allows you to make payments using the credit cards
The use of this plastic currency allows you to transfer the amount from your bank account to the bank of the shopkeeper directly, thereby allowing you to make cashless transactions. A debit card takes the existing money from your savings/current account to transfer it to the shopkeeper. On the other hand, the use of credit card is as good as taking a loan from the bank to make the payments. You need to repay the amount that the bank loans to you within a stipulated amount of time, with interest.
Types of Car Loans
The Indian banks offer a variety of credit cards and schemes on these credit card loans to attract their clients into using these services. They often come up with interesting discount schemes that help the shopper lower his/her cost while making payments. The top 10 types of credit cards that the banks offer include,
- Regular/Standard Credit Cards – It is easy to get your hands on a regular/standard credit card since you do not get any special features with these cards. These cards are featured by a limited spending limit, fixed repayment time as well as low rates of interest. You can use your regular credit card at a number of places and get an immediate loan from the bank. Some banks also feature occasional gift vouchers and discounts on the use of a standard credit card.
- Premium Credit Cards (Silver, Gold, Platinum and Titanium) – The premium cards feature extra features such as exclusive discounts and membership. You might need to pay an extra membership fee to get your hands on one of these cards. The bank usually gives out these credit cards to people who have a really good credit history and have been with the bank for a long period. You get a higher spending limit on these cards compared to a regular credit card.
- Rewards Credit Cards – The rewards credit card is crafted out for people who love to shop or go out for spending some luxury time. These cards get you access to discounts on a regular basis. It is always advisable to go for a credit card from a bank that has a good reputation and contacts. This card will give you access to discounts at several stores, depending upon the reach and the tie-ups of the bank. The rewards credit cards also feature the extra discount option in which the user gets reward points on spending a certain amount, every time. He/she can exchange these rewards points for cash balance.
- Student Credit Cards – The student credit cards are made for high school (or) college students who do not have a major bank account yet. These students often have a joint account with their guardians who can pay their credit card bills. The students use these credit cards for purposes like paying the tuition fee, exam fee, stationery as well as shopping for basic amenities. The parents can keep track of the shopping expenses of their wards with the credit card bill that they get at the end of the month.
- International Credit Cards – These credit cards are helpful for the people who travel internationally often. They can easily shop and pay bills across international borders with their credit cards. They do not need to worry about exchanging the currency for making the payments. With these credit cards, a person can easily keep track of all his/her payments made on an international travel.
- Balance Transfer Credit Cards – The balance transfer cards work similarly to refinancing plans. These cards are used to pay the bills on the cards when you do not have enough cash/balance in your bank account. The balance transfer cards essentially help you when your salary is delayed. The use of these cards will help you avoid the late payment fees on a credit card loan.
- Business Credit Cards – The business credit cards, often known as executive cards are used to make payments for the things bought by a company/business. When you host a product-based or a service-based business, you often deal with a large amount of cash influx and outflux on a daily basis. The business credit cards usually have a very high or no spending limits to allow you to continue your business in times of needs when the cash influx is low.
- Charge Credit Cards – A charge credit card works like a standard credit card. The only difference between these types of cards is that you have a higher or no spending limit on these cards. It is fairly difficult to get these cards since it requires a very good credit history. In case you carry out all your transactions on a daily basis using a credit card, the charge card is the perfect option for you.
- Prepaid Cards – The prepaid cards work in the same manner as the debit cards. However, the only difference is that you do not need to tie these credit cards to a bank account and they can function as a separate card onto which you load money just like you add balance to a mobile prepaid card.
- Limited Purpose Credit Cards – The limited purpose credit cards can feature one of more of the features of the other cards mentioned above. However, these cards are used only for a singular pre-defined purpose. For example, a shopping credit card is used only for shopping and to pay your rent or electricity bill.
When to Apply for a Car Loan?
You can usually apply for a credit card right when you open a new account with the bank. The bank will not hesitate in giving you a credit card with a high spending limit in case you have a proof of a really good credit history and a steady source of income. There are several scenarios in which a credit card helps you. You can apply for a new credit card when you need help with one or more of these needs.
- Avid Shopper – A rewards credit card can be helpful for you in case you are an avid shopper. If you shop at shopping malls and large grocery stores often, the credit card can help you secure a hefty amount of discount. The credit card is a perfect choice for women who love to go out on spa days and love to shop for lifestyle articles at shopping malls. In fact, a few banks also offer credit cards that serve the needs of women specifically
- Spend Money on Leisure Activities – Some reward credit cards are also coupled with offers for leisure activities such as movies, spa days, dinners, etc. In case you are a person who loves to go out on a dinner or a movie frequently, these cards can help you score a good amount of discount on the bills.
- Awkward Salary Receiving Time – In case you tend to spend the money before you receive your next salary every time, a credit card is a perfect option for you. The credit card will serve as a saviour for you in case you need money immediately but have no balance in your bank account. Having a credit card is a good idea for a person who starts a fresh job and does not have a lot of savings.
- A lot of Unaccountable Expenses – If you deal with a lot of unaccountable expenses on a daily basis, the credit card can help you keep your cost to a minimum. You can also keep track of your expenses using the credit card bill that you get at the end of the month.
- Avid Traveller – The international credit card will help you avoid the headache of money exchange rates when you are an avid international traveller. This credit card will also help you save on flight tickets and conversion rates from time to time.
- Online Shopper – The major banks in India have tie-ups with major eCommerce platforms like Flipkart and Amazon to offer your discounts on online shopping on a regular basis.
- Student Needs – A credit card is a perfect solution for a student since he/she can keep track of his/her expenses using the credit card bill received at the end of the month.
Best Banks for Credit Cards
Almost every major as well as minor banks in India offers a variety of credit cards to its users. Some of the best banks offering credit cards include,
- Axis Bank,
- ICICI Bank,
- IndusInd Bank, etc.
Eligibility Criteria for a Credit Card
You need to fulfil the following criteria in order to be eligible for a credit card,
- Age limit – 18 to 65 years of age,
- Indian Citizenship,
- Regular source of income of the individual or joint account holder,
- Account with the particular bank,
- Preferably a good credit score.
These criteria may vary from bank to bank.
List of Documents Required for Application of a Credit Card
The list of documents required to avail a new credit card from a bank include,
Benefits of a Credit Card
- Identity Proof – Pan Card, Driving License,
- Proof of Residence,
- Bank Statement – For the account where you deposit your salary,
- Salary Slips for the co-applicant for past 3-4 months,
- Passport Size photographs.
Some of the benefits that you can avail on the use of a credit card include,
- Theft-proof and protected by a pin,
- Helpful in emergencies when you do not have enough balance in your bank account,
- Access to occasional discounts and offers,
- Helps you build a good credit score,
- Helps you keep track of all your purchases.