Credit cards are among the most versatile and rewarding financial tools available today. Whether you want to earn cashback, collect air miles, enjoy premium travel benefits, manage monthly expenses smarter, or simply build a strong credit score, the right credit card can help you do it all. But with hundreds of cards in the market – each offering different rewards, fees, interest rates, and eligibility criteria – choosing the best one can quickly become confusing. This comprehensive guide breaks down everything you need to know about credit cards in India: what they are, how they work, key terms, types of cards, charges, eligibility, comparison framework, and the best cards across categories. Use this finanjo’s guide as your complete credit card handbook to choose, use, and manage cards wisely.
A credit card is a financial instrument issued by a bank or NBFC that allows you to borrow money up to a pre-approved limit to pay for purchases, bills, and services. Instead of paying immediately from your bank balance (like a debit card), a credit card lets you pay later within an interest-free period, or convert purchases into EMIs, or carry forward outstanding balances with interest.
In simple terms, a credit card works on the concept of short-term credit: the bank pays on your behalf at the time of purchase, and you repay the bank later on your monthly due date.
| Credit Card | Debit Card |
| You spend borrowed money from the bank (up to your credit limit). | You spend your own money from your bank account. |
| Offers interest-free period. | No interest-free period. |
| Improves credit score if used responsibly. | No impact on credit score. |
| More rewards, cashback, travel and lifestyle benefits. | Limited rewards. |
| Higher risk if bills are unpaid (interest, penalties). | Lower risk since you spend what you have. |
Banks issue credit cards because they are profitable when used responsibly or irresponsibly. They earn through:
This is why banks offer aggressive signup bonuses, cashback, discounts, and lounge access — because long-term revenue often outweighs these benefits.
When used correctly, a credit card is a powerful financial tool — but careless use can lead to long-term debt problems.
Credit cards are safe and beneficial for any disciplined user who can pay bills on time and avoid unnecessary debt.
Understanding credit card terminology is essential to managing your card responsibly, avoiding penalties, and maximizing rewards. This section explains all important concepts such as credit limit, available balance, cash limit, utilization ratio, statement date, due date, interest, penalties, and more — in clear, detailed language.
Your credit limit is the maximum amount you can borrow from the bank using your credit card. It is assigned when your card is issued and may increase over time based on your usage and repayment behavior.
| Term | Meaning |
| Total Credit Limit | The maximum amount you can spend using your card. |
| Available Credit Limit | The remaining amount you can still spend (after existing transactions). |
| Cash Limit | The part of your limit that can be withdrawn as cash (usually 10–30% of total limit). |
| Shadow Limit | A temporary internal limit for security when transactions are still pending. |
| Overlimit Facility | Some banks allow you to exceed your limit for a fee. |
The Credit Utilisation Ratio is the percentage of your credit limit you use. It is a critical factor in your CIBIL score.
Example: If your limit is ₹1,00,000 and you use ₹60,000 your CUR is 60% — considered high.
The billing cycle is the period between two statement generation dates, typically 28–31 days. All transactions made within this period appear in your statement.
Example: Billing Cycle = 6th to 5th → Statement generated on 5th.
This is the day your credit card bill is generated. All purchases made after this date fall into the next cycle.
The due date is the last day to pay your bill without incurring interest or late penalties. It is usually 15–20 days after the statement date.
This is the period between the transaction date and the due date during which no interest is charged if the entire bill is paid on time.
Tip: Purchases made right after the statement date get the longest interest-free period.
This is the complete amount you owe to the bank for that billing cycle — including purchases, EMIs, fees, and interest (if any).
The minimum amount you must pay to avoid late payment fees. Usually 5% of the total due.
When you pay less than the full amount and carry forward the balance, you are “revolving” credit. Banks then charge interest on the remaining amount.
Using your credit card to withdraw cash from an ATM. This should be avoided because:
You can convert large purchases into EMIs to pay over several months. EMI interest typically ranges from 12% to 18% annually.
Some banks allow spending beyond your credit limit as a premium feature. However:
| Term | Description |
| Reward Points | Points earned on transactions, redeemable for vouchers, products, or flights. |
| Cashback | Direct monetary credit to your statement. |
| Miles | Airline loyalty currency redeemable for flights and upgrades. |
| Accelerated Rewards | Higher rewards for specific categories (e.g., fuel, travel, online shopping). |
Knowing these terms helps you understand your bill better, avoid interest charges, manage your utilization, and maintain a strong credit score. Mastering these concepts is essential for using credit cards wisely and maximizing their benefits.
Credit cards operate on a simple principle: the bank pays for your purchase at the time of transaction, and you repay the bank later. If you pay the full amount before the due date, you enjoy an interest-free period. If not, the bank charges interest on the outstanding amount.
Behind this simple usage experience is a highly structured financial process involving card networks, issuing banks, merchant banks, and payment gateways. Understanding this mechanism helps you use your credit card more efficiently and avoid unnecessary charges.
| Entity | Role |
| Cardholder (You) | Uses the credit card for purchases or payments. |
| Issuing Bank | The bank/NBFC that gives you the credit card and sets your credit limit. |
| Merchant | The store/website where you use the card. |
| Acquiring Bank | The merchant’s bank that accepts payments. |
| Card Network | Platforms like Visa, Mastercard, RuPay, Amex facilitate transaction routing. |
| Payment Gateway | Secure digital infrastructure for online transactions. |
All these entities collaborate instantly to approve your transaction within seconds.
The interest-free period is the time between the transaction date and the bill due date. This can vary between 18 and 50 days based on:
Example:
Tip: Use your card right after the statement date to maximise interest-free days.
| Term | Meaning |
| Total Amount Due | The complete bill amount you owe to the bank. |
| Minimum Amount Due | Small portion (usually 5%) required to avoid late payment fees. |
This mixed revenue model allows banks to offer rewards, discounts, cashbacks, and lounge access to customers.
Important: Transactions after the statement date go to the next cycle.
Cash withdrawals should be avoided unless absolutely necessary.
Credit cards in India come in various categories designed for different spending patterns, lifestyles, income levels, and financial goals. Choosing the right type of credit card ensures you earn the maximum benefits — cashback, rewards, travel perks, fuel savings, or low-cost credit. Below is a complete, in-depth breakdown of all major credit card types available in 2025.
These cards offer direct cashback on categories like online shopping, utility bills, groceries, and digital payments.
| Pros | Cons |
| Instant monetary benefit | Cashback caps may apply |
| Simple redemption (auto credit) | Category restrictions |
These cards earn points for every transaction, which can be redeemed for vouchers, merchandise, travel, or statement credit.
| Pros | Cons |
| Flexible redemption options | Reward value varies by catalog |
| Better long-term value | Redemption fees may apply |
Designed for frequent travelers, these cards offer air miles, free airport lounge access, priority services, hotel discounts, and travel insurance.
| Pros | Cons |
| High-value benefits for travelers | Low value if you don’t travel often |
| Miles can be extremely valuable | Foreign exchange markup applies |
These cards focus specifically on accumulating air miles that can be redeemed for free flights, upgrades, or partner rewards.
Fuel cards help reduce the cost of petrol/diesel by offering surcharge waivers, reward points, or high cashback on fuel transactions.
| Pros | Cons |
| Guaranteed fuel savings | Benefits limited only to fuel |
| Good for high mileage users | Partner-specific benefits (HPCL/BPCL) |
Offer enhanced rewards for shopping categories like fashion, dining, entertainment, and e-commerce platforms.
Issued in partnership between a bank and a brand (e-commerce, airlines, hotels, telecom, fuel pumps).
| Pros | Cons |
| High rewards on partner brands | Lower rewards outside partner ecosystem |
| Exclusive discounts | Limited flexibility in rewards |
Designed for SMEs, startups, and self-employed individuals to manage business expenses and improve cash flow.
High-end cards offering luxury travel, lifestyle perks, dedicated concierge, unlimited lounge access, golf benefits, and superior rewards.
| Pros | Cons |
| Maximum rewards and luxuries | High annual fees |
| Exclusive travel benefits | Requires excellent credit score and high income |
These cards are issued against an FD and are perfect for beginners, students, or individuals with low CIBIL scores.
These cards have zero joining fee and zero annual fee forever, making them ideal for cost-conscious users.
Issued to college students with minimal documentation, usually with low limits and zero annual fees.
These cards offer lower finance charges and are suitable for users who may carry balances or need emergency credit.
Selecting the right type ensures maximum savings and rewards based on your spending behavior.
Credit card eligibility determines whether a bank will approve your application and what type of card you qualify for. Banks assess your income, credit score, employment stability, repayment capacity, and risk profile before issuing a card. This section covers all eligibility requirements in detail so you can prepare and improve your chances of approval.
Income is one of the strongest factors in determining credit card approval. Higher income allows approval for premium cards, while moderate income qualifies for basic or cashback cards.
| Card Category | Typical Monthly Income Required |
| Entry-Level Cards | ₹15,000 – ₹25,000 |
| Mid-Range / Rewards Cards | ₹25,000 – ₹60,000 |
| Premium Cards | ₹75,000 – ₹1,50,000 |
| Super-Premium Cards | ₹2,00,000+ (or high net worth) |
Accepted Income Proofs: Salary slips, Form 16, bank statements, ITR (for self-employed).
Banks evaluate the stability and reliability of your employment.
Your credit score is a major approval factor. Most banks prefer a score of 700 or above.
| CIBIL Score Range | Approval Chance |
| 750+ | Very high approval; eligible for premium cards |
| 700–749 | Good approval chances for most cards |
| 650–699 | Limited to basic cards; some banks may reject |
| 600–649 | Poor; better to apply for secured cards |
| Below 600 | Very low; secured card recommended |
Tip: A clean repayment history significantly boosts eligibility.
Your savings account, FD, salary account, or loan history improves trust and increases approval odds.
Banks analyze how much of your income is already used to repay loans.
If you have low income or a low credit score, secured cards issued against an FD are easier to get.
Some banks maintain internal employer lists based on risk profile:
Banks may have different income requirements for metro, semi-urban, and rural applicants.
Banks also assess behavioral data such as:
Credit card eligibility is based on income, CIBIL score, profession, and repayment capacity. A strong financial profile ensures approval, higher credit limits, and access to premium cards. Understanding these criteria helps you prepare better and choose cards you are most likely to qualify for.
Credit cards offer great benefits, but those benefits come with a wide range of charges. This section breaks down every common fee you’ll see on a credit-card statement, explains how interest is calculated, gives typical ranges, and shows clear examples so you can spot and avoid unnecessary costs.
Banks earn from credit cards through interest, merchant fees, and service charges. Fees pay for rewards, fraud protection, customer service and the cost of lending. Knowing each charge helps you choose the right card and reduce costs.
| Fee / Charge | What it is |
| Annual Fee / Renewal Fee | Yearly charge to keep the card active. Premium cards often have higher fees but more benefits. |
| Joining Fee | One-time fee charged when you get the card (some banks waive it or refund via spends). |
| Finance Charge / Interest | Interest on unpaid balances. Calculated on outstanding amount when you don’t pay the full statement. |
| Cash Advance / ATM Withdrawal Fee | Fee charged for withdrawing cash with your credit card. Interest usually starts immediately. |
| Foreign Currency Markup (FX) | Percentage added on transactions made in other currencies (international cards). |
| Late Payment Fee | Penalty for missing the payment due date. |
| Overlimit Fee | Charge if you exceed your sanctioned credit limit (if the bank allows overlimit). |
| Returned Payment / Dishonour Fee | Fee when an ECS/standing instruction/cheque fails or is returned. |
| EMI/Loan Processing Fee | Charge to convert transactions into EMIs or for personal loan on card. |
| Add-on Card Fee | Fee for supplementary cards issued to family members. |
| Card Replacement / Re-issuance Fee | Cost to replace a lost/damaged physical card. |
| Reward Redemption Fee | Some programs charge to redeem points or miles (rare but possible). |
| Inactivity / Dormancy Fee | Charge if the card has no activity for a long period (not common but exists). |
| GST / Applicable Taxes | Goods & Services Tax on fees and on some service charges as mandated by tax law. |
| Fee | Typical Range |
| Annual / Renewal Fee | ₹0 (lifetime-free) to ₹10,000+ (super-premium) |
| Joining Fee | ₹0 to ₹5,000 (often waived or rebated) |
| Interest / Finance Charge (monthly) | ~2.5% to ~4.0% per month (≈30%–48% APR) |
| Cash Advance Fee | 2.5%–3.5% of amount withdrawn + possible flat ATM charges |
| Foreign Currency Markup | 1.75%–3.5% of transaction value |
| Late Payment Fee | ₹100–₹1,000 (depends on outstanding) |
| Overlimit Fee | ₹100–₹1,000 or 2%–3% of excess |
| Returned Payment Fee | ₹200–₹1,500 |
| Card Replacement Fee | ₹100–₹500 |
| Add-on Card Fee | ₹0–₹500 |
| EMI Processing Fee | 0%–2% of transaction (varies) |
Interest is normally calculated on the outstanding daily balance using the card’s monthly rate. Below is an example so you can follow the arithmetic precisely.
Notes: Banks may use monthly periodic rate (APR ÷ 12) instead of day-count, and rounding rules vary. Always check issuer’s T&C for exact computation method.
Cash withdrawals using a credit card combine a cash-advance fee and immediate interest. There is no grace period. Example:
Balance transfers let you move expensive card debt to another card with a lower rate or 0% offer for a limited time. There is usually a balance-transfer fee (e.g., 1%–3%). Compare the savings:
Issuers must disclose interest calculation method, charges, and T&C in the card agreement and on statements. Always review the key fact statement before accepting a card. If unsure, ask the bank to explain how they compute interest and which fees attract GST.
Bottom line: Fees can erode card value fast, but the right card + disciplined payments + awareness of charges turns a credit card into a net benefit. Always calculate realistic costs (using the step-by-step interest example above) before carrying a balance or taking cash advances.
The credit card billing cycle is the monthly period during which all your transactions are recorded to generate your statement. It typically ranges from 28 to 31 days, and everything you swipe, spend, or convert into EMI during this period appears in that cycle’s bill.
The cycle ends on your statement date, after which the bank gives you an additional 15–20 day grace period before the due date. Paying your full bill before the due date ensures you enjoy interest-free usage.
| Billing Cycle | 6th to 5th of every month |
| Statement Date | 5th |
| Due Date | Usually 20–25th of the same month |
Transactions made right after the statement date offer the longest interest-free period. Transactions made right before the statement date offer the shortest.
Choosing the right credit card can significantly impact your savings, rewards, and overall financial experience. Since each card is designed for a specific user type — shoppers, travelers, fuel spenders, beginners, or premium users — comparing credit cards properly helps you pick the one that gives the maximum value for your lifestyle.
Below is a structured, step-by-step framework to compare credit cards effectively.
Start by analyzing where you spend the most. This determines the type of card that will benefit you the most.
Pick a card whose benefits match your top 2–3 spending categories.
| Reward Type | Best For | Notes |
| Cashback | Everyday spenders | Simple, direct savings |
| Reward Points | Diverse spending | Good for vouchers & flights |
| Air Miles | Frequent flyers | High value for travel redemptions |
| Co-branded Benefits | Brand loyal buyers | Highest rewards on partner platforms |
Key things to check:
Every credit card has a cost, but premium cards often justify their high annual fees with benefits like lounge access, miles, hotel perks, and accelerated rewards.
| Charge | Impact |
| Interest Rate | Higher rates increase cost if you revolve |
| Foreign Exchange Markup | Major factor for international users |
| Cash Advance Fee | No interest-free period + immediate charges |
| Overlimit Fee | Penalty for exceeding credit limit |
| Late Payment Fee | Affects credit score + adds interest |
Choose cards with low FX markup if you travel or shop internationally. Avoid cards with complicated or restrictive reward structures.
Beyond rewards, credit cards often provide lifestyle and travel privileges.
Ensure these benefits match your lifestyle. A card with lounge access is useless if you rarely fly.
Rewards are only beneficial if redemption is easy and valuable.
Some banks offer instant approval for salary account holders or existing customers.
Higher limits improve credit utilization and enable bigger purchases. Check:
A great credit card experience depends on how easy it is to:
Strong customer support is essential for resolving fraud or billing issues quickly.
| Your Goal | Best Type of Card |
| Maximum Cashback | Cashback Cards / Co-branded cards |
| Travel Benefits | Miles Cards / Travel Cards / Premium Cards |
| Fuel Savings | Fuel Credit Cards |
| Beginner-Friendly | Lifetime Free / Secured Cards |
| Premium Lifestyle | Super-Premium Cards with lounge & hotel perks |
Before finalizing your card, go through this checklist:
The effective reward rate tells you how much value you actually get back for every ₹100 spent.
Formula:
Effective Reward Rate (%) = (Value of Rewards ÷ Total Spend) × 100
Use this to find the most profitable card for your spending pattern.
Bottom line: The best credit card isn’t the one with the highest rewards — it’s the one that matches your lifestyle, spend categories, and financial goals. Use this framework to evaluate cards objectively and choose the one that delivers the highest real-world value.
Explore all the credit cards with their eligibility, fees, how to apply, reward points structure, and other benefits and find the perfect one for you. – Finanjo’s Credit Cards Hub
This section answers the most common and important questions users have about credit cards — from interest, billing, credit limits, and charges to usage tips, credit score impact, safety, payments, and eligibility. These FAQs help beginners as well as experienced cardholders understand practical scenarios and avoid common mistakes.
A credit card lets you borrow money from the bank up to a pre-set limit and repay it later. A debit card uses your own bank balance. Credit cards offer benefits like interest-free periods, rewards, and cashback, while debit cards do not.
Most experts recommend having 2–3 credit cards — enough to diversify rewards and maintain low utilization, but not so many that you lose track of payments.
Paying the minimum due avoids late fees but not interest. Your credit score remains safe as long as you pay on time, but your outstanding balance will start accumulating interest immediately.
Yes, but it is usually expensive. Cash withdrawals attract:
Yes. Paying your bills on time and keeping utilization below 30% helps build a strong CIBIL score. Credit cards are one of the fastest ways to establish credit history.
Yes, as long as you follow basic safety measures:
Keep your credit utilization below 30% of your credit limit. Lower utilization helps maintain and improve your credit score.
Yes. Most banks allow you to convert large purchases into EMIs either instantly during checkout or later via your banking app. Interest rates for EMIs typically range from 12%–18% annually.
Your available limit reduces as you spend. EMIs, pending transactions, or fees may also reduce available credit until the statement is paid.
The grace period is the time between your statement date and due date, usually 15–20 days. Paying the full balance during this time gives you interest-free usage.
Most credit cards have reward expiries ranging between 2–3 years. Some premium cards offer no-expiry rewards. Always check validity in your bank’s app.
Closing old cards can reduce your credit history length and increase utilization, which may lower your credit score. Avoid closing your oldest card unless necessary.
Yes — through secured credit cards issued against a fixed deposit or through add-on cards linked to a primary cardholder.
Immediately block the card via your banking app or customer care. Banks usually issue an instant replacement for a small fee.
No. Multiple cards can actually improve your score by lowering utilization — as long as payments are made on time.
Some banks allow this upon request. Changing your billing cycle can help align your due date with your salary cycle.
These may be:
They typically adjust within a few days.
Banks may reduce limits due to inactivity, risky usage, missed payments, or high utilization. Keeping usage healthy and paying on time prevents this.
Yes, if the bank clearly mentions “Lifetime Free” — meaning no annual or joining fees. However, usage charges (late fee, interest) still apply like any other card.
Many cards offer benefits such as:
Coverage varies by card category.
Cashback is simple and direct. Rewards offer higher value for travel and vouchers but require redemption. The best choice depends on your spending pattern.
You don’t need to, but clearing your balance early can:
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