• Type of Cards

    Banks provide different types of cards to the customers and businesses depending on their need. There can be overlaps between these classifications based on the combinations of services offered by these cards.

    Credit Card

    This is one of the oldest types of cards issued since 1950‘s. through credit card, the card holder enjoys some credit limit and can use the card to pay bills and withdraw funds within the credit limit. Basic characteristics of credit cards

    • Offered to all customers even if they don’t already have a savings or current account.
    • Card holder is given some credit limit based on his credit ratings and monthly income
    • He can use the credit card to pay different utility or merchant bills and withdraw money based on their need
    • The total outstanding limit should stay below the credit limit for all the time.
    • The outstanding amount should be paid within a credit cycle to avoid any interest rate on the same
    • Interest rate is charged on the non-paid outstanding amount and the interest rate is much higher than other financial loans
    • Card holder can repay all the outstanding amount in some cycles with the applicable interest rates
    • Banks and financial institutions earn money from the commissions earned from the merchants or shops.
    • Credit risk involved in credit cards as the customer may default to repay the remaining outstanding amount.

    Different types of credit cards are available for the customers based on their credit rating, usage pattern, usability across different countries and other tie ups with different companies.

    Debit Cards

    Debit cards are offered to all the current account holders (both savings and current accounts) which enable them to spend up to the amount available in their bank account. Debit card has the following characteristics.

    • Only the existing account holders are offered with the debit cards
    • Customers can spend only up to the available amount in their account; the amount is instantly debited from their account.
    • No credit risk involved in this type of card from the perspective of the issuer.
    • Banks and financial institutions earn money from the commissions earned from the merchants or shops

    ATM Cards

    ATM cards are offered to the existing account holders and they are used solely for the purpose of cash withdrawals only. Previously ATM card could be used only in the network of the card issuer itself, like ATM card issues by bank X can only be used in the network owned by Bank X in order to withdraw money. But currently one ATM card can be used in any ATM machine connected in any network in order to withdraw money, like ATM card issued by Bank X can be used to withdraw money in ATM network provided by any bank other than Bank X as well.

    Currently ATM facility is clubbed with credit and debit cards and the money withdrawal limit is decided from the type of card. For credit cards, the money withdrawal limit can be anything under the total credit limit and for debit cards; the money withdrawal limit should be restricted to the balance available in the main account.

    Travel Currency card

    Travel currency card is mainly used for overseas travel which reduces dependency on Foreign currency conversion. This card is preloaded with a specific amount and can be issued in multiple currencies. The main characteristics of this card are

    • This card is preloaded with some specific amount and can be issued in multiple currencies
    • The foreign exchange rate is decided and locked at the time of purchase and it does not change during the period of spending.
    • One currency card is operational in only one specific foreign currency which reduces benefits for multiple country travel at the same time.
    • The unitized amount can be surrendered provided it is higher than the threshold level.
    • Can be used as an ATM card as well to withdraw amount in foreign currency.

    Travel cards become very popular nowadays for overseas travel to another country as it is very handy and comes with security pin number. Travelers don’t need to carry cash while traveling, thus reducing risk of theft.

    Gift Cards

    Gift cards have come up to revolutionize the gifting idea through which someone can gift a card to someone else with some pre-loaded money into it. The other person can use the card in any merchant shop or to pay bills under the pre-loaded limit based on his choice. It provides more options to the card holder and he can buy anything he wants utilizing the preloaded amount.

    Gift cards can also be topped up with more money depending on the choice. Currently Gift cards are replaced with gift vouchers which are easy to procure and easy to use.

    Loyalty Cards

    Loyalty cards are used by different business or companies in order to attract loyal customers. Loyalty points are earned based on the purchase amount on the cards and those points can be converted to money or other gift items. Also the loyalty points can earn the card holder higher discount while doing multiple transactions with the same card.

    Co-branded credit cards which are the combination of credit card as well as loyalty card have become very popular nowadays as they offer significant benefits to the loyal customers and help different brands to retain their customers through proper loyalty programs.

    Corporate Cards

    Corporate cards are issued to the employees of well-known business houses and MNCs which help them to pay their official expenses easily. Here the employees use the corporate card issued to them to pay all the official bills rather than using personal credit or debit card and the outstanding amounts are repaid directly by the company. Company also takes the responsibility of any late payment and pays the interest charges on the same.  It reduces paper work involved in the whole process and helps employees to pay officials bills with much ease.

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