Q. I have recently started working and looking to buy my first credit card. What are the different types of credit cards and their benefits? How can I choose one for myself? Gaurav Pant
A. There are a variety of credit cards available in the market. Each comes with its own set of features and benefits to cater to the unique credit requirements of customers. There are cards available for regular salaried individuals, frequent flyers, shopaholic, students etc. Before buying a credit card, make yourself aware of the different credit cards and the features they offer.
Regular Credit Card: For beginners, a regular credit card may be a great option for the reward points and discounts it offers. You can also have add-on cards for your immediate family members.
Co-branded cards: This kind of card comes handy for people who are frequent fliers. One can enjoy benefits like a discount on flights, extra air miles, free lounge access etc. The air miles can also be redeemed for free flights.
Premium And Super Premium Credit Cards: As a salaried individual, you can upgrade to a premium or a super-premium card when your income and affordability increases. These cards will provide you with higher credit limits, more benefits in terms of rewards and discounts.
Cashback Cards: These cards are beneficial for those individuals who want to earn cashback on their expenditure every day. The cashback is offered in the form of rewards, which may be used to settle outstanding amount on the credit card. You can also win discounts at some of the outlets by using a cashback card.
Secured Cards: As the name suggests, these are cards are given based on collateral like a fixed deposit. These are meant for individuals who do not have a good credit score nor an income that meets the requirement for a credit card application. The collateral works as an assurance for the credit card companies that they can adjust the outstanding amount in case you default on payments. These cards get quick approval, come with a lower interest rate than unsecured cards and help you build a credit score for future loans.
Since you are buying your credit card for the first time, keep these pointers in mind to make the right choice.
– Go for cards that come with zero annual maintenance fees.
– Zero annual maintenance fees or ‘No frill credit cards’ do not offer too many cashback offers or discounts.
– Their main advantage is that you get interest-free credit periods similar to those offered by high-end cards.
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