Classification of Credit Cards
A credit card is basically a chip of plastic provided by the banks and other financial organizations that allow the cardholder to make purchases according to customer’s ability to pay back the credit with some additional charges. Credit cards are divided into five types. Based on the mode of credit history, Based on credit card status, Based on geographical validity, Based on the franchise and tie up, Based on the category of the issuer. Let us talk about them one by one :
1. Based on The Mode Of Credit History
Some credit cards are based on the credit history. Like they are classified such that if you are having this particular score you will get this particular type of credit card. These are further divided into two types
· Charge Card
· Revolving Card
Let us discuss them one by one
- a. Charge Card
In Charge Card, no interest is charged. The cardholder has to pay every month. But every person cannot get the charged card. It is limited. As in charged cards, we have to pay every month. We cannot keep dues. So charged cards have no interest. Because you are not supposed to carry a balance in your account. And if you pay your balance every month your credit score gets boost up. It will create a good credit history of yours. This card is best for those who pay their dues regularly. They are generally more expensive than other cards but they give lots of benefits to the customers as well. They do not have any present credit limit.
In Revolving Credit Card there is always a certain amount of credit is available. When this debt is cleared the customer can again be eligible to borrow the money again. This is called a revolving card because if the customer does not clear his dues by the end of the month they get added to the next month or keep on revolving. That is why it is called a revolving card but the customer has to pay interest properly for the due balance. Revolving credit card allows you to borrow money up to a certain limit continuously. And every time you pay back your debt you will get your credit limit back.
2. Based on Credit Card status
Some credit cards are based on the status of your credit card. Like the status of your credit i.e if you are having a good credit card status you will get a particular type of credit card.
These are further classified into three kinds
- Standard Card
- Business Card
- Gold Card
Let us discuss them one by one
A Standard Credit Card is that type of credit card which is given to the new customers initially.
Only business people use Business Credit Card for their commercial purpose (not for any personal use).
Chase Ink Business is the best among the business credit cards. Because it charges no annual fee. You can apply for a business credit card if you are having your own business Business credit cards have a higher credit limit than the personal credit card.
If you have a good credit history, you can get a Gold Credit Card. Being a holder of Gold Card, you can enjoy multiple benefits and these benefits aren’t for standard card holders. It is a special type of credit card which furnishes the customers with extra benefits and a higher credit limit.
3. Based On The Geographical Validity
Some credit cards are based on the geographical status.
Like they are valid in a particular country or particular area.
Check out these two categories :
In India and Nepal, you can use Domestic Credit Cards.
Like RuPay is India’s domestic credit card.
Other countries don’t accept Ru-Pay
Overseas, the International Credit Cards are acceptable as well. You can make use of an international credit card anywhere. This is the best about an international credit card. Globally people are using VISA and MASTERCARD. Many nations accept AMERICAN EXPRESS cards.
4. Based on franchise tie up
Some Credit Cards are classified on the basis of their tie-ups with different banks and financial companies.E.g VISA and MASTERCARD are the two most popular examples of this kind of credit cards.
These are further classified into four types
- Proprietary Card
- Master Card
- VISA Card
- Domestic tie-ups Cards
5. Based On The Category Of The Issuer
There are some companies which provide credit cards to the customers. it can be a bank, a financial institute or any financial company.
- Individual credit card
- Corporative credit card
a.Individual Credit Card
An individual Credit Card is a non -corporate credit card which and you can use it for personal use.
b.Corporate Credit Card
Business is the main purpose of a Corporate Credit Card (corporate credit card).