Overview
Credit cards are one of the most commonly used financial tools in increasingly digitised economies. Credit cards are widely preferred as they come with several different benefits such as attractive reward points, discounts, cashbacks, easy expense-tracking and, of course, allowing you to make purchases on credit and EMI purchases at little to no cost.
Credit Cards in India
In India alone, there are over 77 million active credit cards, and that’s after the Reserve Bank of India’s (RBI) directive to banks to discontinue all inactive credit cards. And this number is only expected to increase as more and more Indians move towards digital transactions and higher quality of life, which includes higher levels of consumption and increased demand for credit.
Another reason for the increasing credit and credit card demand is the accessible credit card market. Applying for a credit card has never been easier, with credit card businesses really stepping it up with simple, quick and often fully-online application processes.
Additionally, new types of credit cards are emerging that cater to customers with varying needs, financial goals and aspirations. You can now get a credit card that’s tailored to you, whether you’re a shopaholic, an avid traveller or a techie.
Credit cards these days are quite advanced and intuitive, offering more convenience and control over credit card limits, expenditures and payments. Many credit card businesses also have comprehensive rewards’ systems and cashback programs that elevate the customer’s experience.
These improvements and increased accessibility have made credit cards popular in Tier 1, Tier 2 and even Tier 3 cities.
Bridging the Credit Gap
While 77 million active credit cards might seem like a huge number, it is but a dent in the total working-age population of the country, which stands at around 437.2 million as of April 2022. Even though many credit users hold more than one credit card, this means that the actual number of people that have a credit card could be considerably lower.
Although the credit card application processes have become simpler and more efficient, applying for a credit card is still no easy feat for many Indians as credit card businesses require you to furnish proofs of a regular source of income and a viable credit history, this excludes millions of Indians who are employed in the unorganised sector. Though India has made definitive strides towards financial inclusion and education, there is still a credit gap that needs to be fixed.
This is where banks and other financial institutions have begun stepping in by introducing innovative and more customer-friendly eligibility criteria and requirements. One such initiative is the prepaid credit card or a collateral-backed credit card.
To apply for this credit card, you need not have a credit history. All you need to do is deposit a certain amount of money into your preferred bank or NBFC account. Your credit card limit will be determined based on your collateral amount. This is a great way to get started with building a good credit score and credit history, which will help you access cheaper debt. Being able to access good, cheap debt is one of the most important steps in the path towards building wealth.
Benefits of a Credit Card
Convenience
With a credit card, you would never have to worry about carrying cash on hand Also, credit cards are widely accepted across the country, and even internationally. Additionally, applying for a credit card is also extremely convenient and simple.
Easy Recordkeeping and Budgeting
A credit card can be a great way for you to keep track of your expenses and budget better. You can also make the most of your daily and monthly expenses by taking advantage of cashbacks, deals and discounts.
Get Access to Cheaper Debt
When you repay your credit card balances diligently, you can build a good credit score, which would help you get access to cheaper debt. Not only would you be able to get loans and debt at low interest rates, but it would also make it easier for you to get a loan.
Low-cost Loans
One of the most attractive features of a credit card is that you’ll get access to extremely low interest debts as per your credit cycle, provided that you pay back in time.
Cash Advances
If you ever need a cash advance for an emergency, you can get in touch with your bank or NBFC for a cash advance. Generally, the interest rates on cash advances are pretty high so use them with caution.
Member Perks
Using your credit card can accumulate points, rewards, cashbacks, exclusive deals and complimentary services. This helps you save some money while shopping and make the most of your expenses.
Closing Statement
Credit cards are one of the simplest and most effective ways to get started on building your credit history and get access to cheaper debt. This can be a great way to make the most of your expenses and get some nifty deals and cashbacks.
Applying for a credit card is now easier than ever, with fully-online application processes, accommodative eligibility criteria and higher credit limits.
