Credit Cards in India (Everything you need to know)
Find out everything you need to know about credit cards in India. This guide is a comprehensive guide that talks about the most important aspects of credit cards, like what is a credit card, the benefits of credit cards, how to apply for a credit card, how to pay your credit card bills, and way more.
Dive into this comprehensive credit card guide and get a detailed understanding of how credit cards work.
Table of Contents:
- What is a Credit Card? (Meaning and Explanation)
- How Does a Credit Card Work?
- Different Types of Credit Cards in India
- Credit Card Benefits (Most Important Benefits of a CC)
- Best Credit Cards in India
- Best Life Time Free Credit Cards
- How to Apply for a Credit Card?
- Documents Required to Apply for a Credit Card
- List of Instant Approval Credit Cards
- How to Check your Credit Card Application Status?
- How to Generate your Credit Card Pin?
- How to Pay your Credit Card bill
- Credit Card Customer Care Numbers
- How to use a Credit Card Smartly
- How to keep your Credit Card Safe
- How to Cancel a Credit Card
- What is the Difference between a Credit Card and Debit Card?
What is a Credit Card? (Meaning and Explanation)
A credit card is a financial instrument that lets you borrow money from a bank or an other financial institution at a predetermined rate of interest. A credit card is similar to a bank loan, but there are certain important differences between the two. When you avail a bank loan, the bank will generally sanction the borrower with a lump sum amount.
When you use a credit card, you can borrow from the bank up to a certain pre-determined limit. The borrower does not need to borrow the whole amount in one go; he can borrow a fraction of the limit from time to time, and he will only need to pay interest on the borrowed amount.
Another very important distinction between credit cards and traditional bank loans is that a borrower does not need to provide collateral in order to obtain a credit card.
How Does a Credit Card Work?
Mentioned below is a step by step way on how a credit card works:
- Card Application: First, a person will need to apply for a credit card at a bank or an NBFC. The card issuer will vet the applicant’s credit card application and decide whether to issue a credit card or not. The decision to issue a credit card is the sole prerogative of the card issuer. If the applicant’s CIBIL score is satisfactory, he or she may be issued a card.
- Setting of Limit: After approval, the bank will decide on the limit of the credit card. This limit is generally based on the CIBIL score and the financial condition of the applicant. The better the financial condition of the applicant, the higher the limit a bank may assign.
- Delivery and Setting of Pin: Now that the card is approved and the limit is set, the card will be delivered to the registered address of the applicant along with instructions on how to set the credit card pin and activate the credit card. Bill payment and customer care information will also be sent to the applicant via a quick-start guide.
- Spending: Now, the cardholder can begin spending using his credit card. They can make online as well as offline purchases, as well as contactless purchases, using their card.
- Bill Payment: Finally, the cardholder will need to pay the borrowed amount to the credit card company before the due date. If they make the complete payment before the due date, they will not be charged any interest. If, however, they do not make the payment within the due date, then interest will be levied on the card holder. Credit card bill payments can be made either through checks, NEFT, or net banking. A cardholder will also have the option to either pay the entire amount, in which case he will not be levied any interest, or pay the minimum payment amount. If a minimum payment amount is made, the credit card company will exercise interest on the balance amount and carry forward the balance amount to the next billing cycle.
Different Types of Credit Cards in India
There are a variety of different credit cards in India. Getting a credit card may sound simple, but getting the correct credit card that elevates your life is slightly more complex. Let us talk about the different types of credit cards in India, along with their benefits, so you can choose the right kind of credit card that makes your life easier.
- Rewards Credit Card: A rewards credit card will give rewards to the cardholder based on the amount of money they spend. For instance, the SBI Prime Credit Card gives the card holder 10 reward points for every Rs. 100 spent. The cardholder can redeem these reward points at select outlets.
- Cashback Credit Card: A cashback credit card provides a specified amount of cash back to your credit card account based on the amount spent. The SBI Cashback Card is an example of a cashback credit card.
- Travel Credit Card: A travel credit card provides a variety of travel benefits, such as lounge access, discounted fares, free air tickets, and more, to the card holder. Frequent travelers can leverage travel credit cards for travel-related discounts and benefits.
- Student Credit Card: A student credit card is catered specifically to students. A student credit card can be used to purchase books, food expenses, tuition expenses, and personal expenses.
- Fuel Credit Card: Fuel credit cards are ideal for people who travel frequently using two-wheelers and four-wheelers. A fuel credit card will provide discounts and cashbacks whenever the card holder pays for fuel using their fuel credit card.
- Shopping Credit Card: Shopping credit cards are designed to provide card holders with benefits, discounts, and cashbacks while indulging in shopping online as well as offline. An example of a shopping credit card would be the HDFC Bank Tata Neu Card.
- Lifestyle and Entertainment Credit Card: Lifestyle credit cards cater to people who spend money to enhance their lifestyle. For instance, spending on gyms, dining, spas, movies, and beyond
- Secured Credit Card: A secured credit card is one where the card holder will have to provide collateral (usually a fixed deposit) to the bank or NBFC to get a credit card. A secured card is provided to applicants with a poor CBIL score or dubious track record.
- Premium Credit Card: Premium credit cards are geared towards high-net-worth individuals (HNIs). The benefits provided on premium credit cards are concierge service, complimentary hotel stays, luxury dining, premium airport lounges, a high credit limit, and more.
- Co-branded Credit Card: A co-branded credit card is a credit card that is co-branded with a brand. Examples of co-branded credit cards would be the HDFC Bank Amazon Credit Card and the IRCTC SBI Platinum Card.
Credit Card Benefits (Most Important Benefits of a CC)
A credit card is a powerful and extremely versatile financial instrument. Let us look at some of the most important benefits of a credit card:
- Collateral-Free Loan: A credit card is essentially a collateral-free loan, as you do not need to put up any collateral to avail of it. That being said, the card issuing company will do a background check and credit score check before issuing the card.
- It is Secure: A credit card is a secure financial instrument. It has a variety of security measures in place, such as an OTP confirmation, advanced data analytics (to catch fraud), a PIN, an EVM chip, and more.
- Cashbacks and Rewards: A credit card can be a great way to accumulate cashbacks and reward points. These reward points can later be used to buy items.
- Emergency Fund: A credit card can be kept for emergency contingencies, such as hospitalizations. It can prove invaluable in such events.
- Earn Interest: By spending money via credit cards and paying the credit card companies before the due date, you ensure that you can keep your cash in a savings account and earn interest on it.
Best Credit Cards in India
Mentioned within are some of the best credit cards in India. We have chosen a variety of different types of credit cards so that everyone can find a credit card that works for their use case.
Features and Benefits
SBI Card Prime
10 reward points for every 100 spent.
Rs 3000 welcome voucher.
Up to 20X Reward Points.
Complimentary Club Vistara Silver Membership.
Citibank Cashback Credit Card
5% cashback on movie tickets.
5% cashback on phone bill payments.
5% cashback on all other spending.
Amazon Pay ICICI Credit Card
5% cashback for Amazon Prime users.
Standard Chartered EaseMyTrip Credit Card
20% discount on hotel bookings
10% discount on air tickets.
Free Lounge access
BPCL SBI Card Octane
7.25% cashback on your fuel expenses at select Bharat Petroleum Gas stations.
ICICI Instant Platinum Card
Students / Non-salaried people
Exclusive dining offers and movie ticket offers
HDFC Regalia Credit Card
12 domestic lounge accesses per year.
HDFC Tata NEU Credit Card
2% cashback on spends on Tata NEU.
1% cashback on UPI spending.
Zero lost card liability
4 Complementary lounge access.
HDFC Diners Club Privilege Credit Card
Buy 1 Get 1 free on Bookmyshow.
5x reward points on Zomato and Swiggy.
4 reward points / 150 Rs spent.
IDFC First Millennia Credit Card
Unlimited reward points that don’t expire.
25% discount on movie tickets.
1% fuel charge waiver.
300+ merchant offers along with 1500+ restaurant offers.
Personal accident cover up to Rs. 2 lakhs.
Best Life Time Free Credit Cards
Mentioned within are some of the best lifetime free credit cards in India along with their features and benefits.
- Amazon Pay ICICI Bank Credit Card: This is an ideal credit card for people who use Amazon Prime as well as shop on Amazon. This card provides 5% cashback to Amazon Prime subscribers as well as 3% cashback to non-Prime members. The card also gives 1% cashback on all other purchases.
- Dhanlaxmi Bank Platinum Credit Card: This Dhanlaxmi Bank lifetime-free credit card provides the benefit of 5% cashback on supermarket spends. This card also provides free insurance coverage to the cardholder.
- HSBC Visa Platinum Credit Card: This life-time free credit card by HSBC is geared towards people who want a good lifestyle. This card provides three free domestic and international lounge accesses; along with this, the card holder will also get free Bookmyshow tickets on Saturdays.
- AU Bank Xcite Credit Card: This card provides a 1% surcharge waiver (up to Rs. 150) on fuel costs. Along with this, the cardholder will also get 0.75% cashback on online as well as offline spends. This card also gives the holder two complementary IRCTC lounge accesses.
- IDFC First Select Credit Card: This lifetime-free credit card provides four complimentary lounge accesses along with free movie tickets twice a month. Further, you can also avail a fuel surcharge waiver of up to Rs. 300 every month as well as 20% off at more than 1500 Restaurants.
How to Apply for a Credit Card?
Applying for a credit card in India is a rather straight forward process. These are steps you need to follow to apply for a credit card in India.
Step 1: Research your ideal credit card
The first step is to know that there are a plethora of credit cards with different benefits. You need to ensure that you apply for the most ideal credit card that is designed to serve you. A credit card needs to be an asset, not a liability. Decide on what type of credit card you need to apply for, whether it is a rewards card, cashback card, lifestyle card, premium card, co-branded card, or travel credit card. Once you have zeroed-in on the type of credit card, you need to compare all of the credit cards.
Step 2: Compare credit cards
Now, for instance, you may want to apply for a travel credit card because it suits your travel habits and lifestyle. You will need to compare at least 5–10 travel credit cards on the market. You will need to compare the number of bonus points, free travel miles, sign-up bonuses, credit card fees, grace periods, cashbacks, and more.
These are the parameters you need to consider while zeroing in on your travel credit card. Similarly, if you want to avail a lifestyle credit card, you will have to examine the points related to it, such as discounts on hotels, discounts on restaurants, cashback on gyms and spas, etc.
Step 3: Apply for a credit card
Now that you have finalized your desired credit card, you will need to apply for it. You can either apply for the credit card offline (by visiting the branch) or online through the company’s portal. Online applications are usually expedited, and you will receive the credit card sooner. Keep the following documents at hand before applying for the card:
- Aadhar Card
- Pan Card
- Income Proof/Salary Slip
- Income Tax Returns and Bank Statements
The credit card company may ask for one or more of these documents. Once these documents are ready, initiate the credit card application process.
Step 4: Verification and Approval
Now that you have applied for the credit card, you will have to wait for the bank to do its background check. They will now examine your provided documents and initiate the check. This usually takes around 3–4 working days. The back will check your credit score as well as other credit histories. If the applicant meets the bank’s criteria, a credit card will be approved and issued to the applicant.
Step 5: Card Delivery
Finally, the card will be delivered to your registered address. Kindly brief yourself with the instructions mentioned in the envelope, set your credit card pin, and activate your card. Once this is done, you can begin using your card.
List of Instant Approval Credit Cards
What is an instant approval credit card? Well, an instant approval credit card is a virtual credit card that gets sent to you via email once you have been approved. You do not have to wait to receive a physical credit card, you can simply start spending using your instant approval virtual credit card.
Mentioned within are a list of instant approval credit cards in India.
- Kotak 811 #Dream Different credit card: This card provides 2 reward points for every 100 spent. You can also withdraw 90% of your limit through an ATM.
- Standard Chartered virtual credit card: This SC virtual credit card provides a variety of discounts and cashbacks on dining and travel booking websites.
- Axis Bank Insta Easy credit card: This card allows the card holder to withdraw 100% of the limit via an ATM. If you generally require instant cash then this card could be the one for you.
How to Check your Credit Card Application Status?
There are a variety of ways to check your credit card status. Let us look at some of the common ways to check your application status.
- Call the customer care: This is the most straight forward way of check your credit card status. Simply call the customer care number of the credit card company. You will receive the customer care number of the card company along with your welcome kit.
- Check online: You can also check your credit card application status online through the credit card company’s website or mobile app. Credit card companies usually have a dedicated web page where applicants can check your card application status.
- Visit the branch: Lastly, you can also visit the bank’s branch to get clarity on your application status.
How to Generate your Credit Card PIN?
There are generally three ways to generate a credit card pin. Let us talk about all of them below.
- Generate PIN through ATM: You can generate your credit card PIN by visiting the bank’s ATM machine. Just insert your card in the ATM machine and select the generate PIN option. You can easily generate your credit card PIN through this option
- Generate PIN through mobile app: You can also generate your credit card via via your bank’s mobile app. You will simply need to navigate to your credit card settings within your mobile app and generate your card PIN.
- Generate PIN through netbanking: Lastly, you can also generate your card PIN through your bank’s netbanking portal. Login to your netbanking portal and navigate to the credit card setting and generate your card PIN from there.
How to Pay your Credit Card Bill
Paying your credit card bills on time are extremely important. Delaying payments beyond the grace period will attract heavy interest that every prudent credit card user must avoid.
You can pay your credit card bill through one of the following ways:
- Pay credit card bill through netbanking: You can pay your credit card account by going to your netbanking portal and adding your credit card account as a beneficiary. Once you have done this, you can simply transfer the bill amount to your credit card account and pay the outstanding bill.
- Pay credit card bill through mobile wallet apps: You can also make credit card bill payments through mobile wallet apps like Phonepe, Google pay, and PayTM. There are dedicated sections within these apps for credit card bill payments.
- Pay credit card bill through cheque: You can also drop your cheque at the bank’s ATM or branch. Be sure to mention your credit card account number on the front and back of the cheque.
- Pay credit card bill through cash: You can also pay cash directly to the bank. Be sure to collect the receipt / acknowledgement after making the cash payment.
- Pay credit card bill through NEFT/RTGS: You can also make your credit card bill payment through NEFT/RTGS. You will have to visit your bank’s branch for the same and initiate an NEFT/RTGS request.
Credit Card Customer Care Numbers
Mentioned below are the customer care numbers and email IDs of the most popular credit card companies in India.
HDFC Bank Credit Card
1860 267 6161
Axis Bank Credit Card
1860 500 5555
IndusInd Bank Credit Card
1860 267 7777
Kotak Bank Credit Card
1860 266 2666
HSBC Bank Credit Card
1800 267 3456
1800 121 2208
State Bank of India Credit Card
1800 180 1290
Citi Bank Credit Card
1860 210 2484
Standard Chartered Credit Card
How to use a Credit Card Smartly?
Taking out a credit card is an important financial decision and you need to always be on top of your credit card usage. This is how you can use your credit card in the smartest and best way possible.
- Pay before due date: Credit card interest rates can be extremely high, ranging from 2.5% to 3.5% per month. This is extremely high and can be avoided if you make bill payments within the grace period. Always strive to make bill payments before the due date.
- Do no overspend: Getting a credit card can be exciting and people sometimes end up spending more than they should. Also, be cognizant of your credit card spends and spend less than you need. This will ensure that bill payments are manageable.
- Choose the right kind of credit card: Choosing the right kind of credit card that enhances your life is extremely important. For instance, if you are a frequent flyer then you may want to opt for a travel credit card that gives complementary air miles and lounge access. If you are an HNI then you may opt for a premium credit card. So on and so forth.
- Strive to pay in full: It is wise to pay the entire bill amount on or before due date. Do not just pay the minimum amount and defer the rest of the payment later, this attracts interest.
- Never share card details: Never share the sensitive card details to anyone you don’t trust. This includes the card number, CVV, PIN, and the card itself.
How to keep your Credit Card Safe
- Do not use public Wi-Fi: Never use a public Wi-Fi network to make credit card transaction. Public Wi-Fi networks are prone to be hacked, and your credit card details may end up in the hands of nefarious agents. All transactions must be done on a secure network.
- Always double check the website: Double check the website to ensure that it is encrypted i.e (it has https://) Also, double check the URL and domain name before proceeding.
- Enable alerts: Always keep SMS, Email, and WhatsApp alerts on. This ensures that you are always on top whenever the need arises.
- Additional security: You can also enable additional security measures on your phone such as face scanner, finger scanner, pattern scanner, and more. You can also lock certain applications on your phone with additional security.
- Don’t share OTP: Never share your OTP with anyone on the phone. Especially if they claim to be from the bank. Bank officials never ask for OTPs from customers. Further, bank officials will not even ask for the entire card number and may only request the last 4 digits for authentication.
- Report a stolen card ASAP: If you have misplaced your card, or it has gotten stolen, you must immediately report this to your bank and stop all payments. You can use the customer care number to do so.
How to Cancel a Credit Card?
These are the steps you need to follow to cancel your credit card.
Step 1: Pay your outstanding amount
First, you will need to clear your credit card bill in full and pay the outstanding amount, including any interest that may have accrued.
Step 2: Redeem all your rewards
There may be some rewards that are accumulated on your credit card based on your card spending. All these rewards must be redeemed before initiating a card termination request.
Step 3: Contact the bank
Now, you will need to call the bank’s customer service department and tell them that you wish to cancel your card. They will take your request and initiate cancellation after authenticating you. You can also directly visit the bank for the same.
Step 4: Request confirmation
Request a written confirmation that your card was cancelled. This confirmation can either be via a letter or an email. Be sure to take the confirmation to avoid any further complications.
Step 5: Termination of physical card
Now that your credit card is cancelled, you must terminate the physical card and discard it. Make sure that all visible details are obscured and cannot be identified.
What is the Difference between a Credit Card and Debit Card?
Mentioned within are some of the most important differences between a credit card and a debit card.
- Source of funds: In a debit card, the funds belong to the debit card holder. In a credit card, the funds belong to the credit card company. If you spend from a debit card, you do not need to return the money to anyone. If you spend via a credit card, you will have to return the money to the credit card company.
- Interest: There is no interest that you need to pay to the bank if you use a debit card. If you use a credit card, you will have to pay an interest to the credit card company if you do not pay the bill amount on or before the due date.
- Impact on credit score: Using a debit card does not impact your credit score. Using a credit card will impact your credit score. You credit score will be impacted based on how you have used your credit card. If you have responsibly used your credit card and make timely bill payments, then your credit score may improve. Conversely, if you have not made timely payments or defaulted on payments then your credit score will decrease.