Credit Card In Detail - Part II

 A credit card is a type of payment card issued by a bank or credit card provider. It allows you to buy goods, services, or withdraw cash on credit. When you use a credit card, you borrow money that needs to be repaid later.

In simpler terms in banking language: A credit card is a credit facility provided by a bank or credit card issuer. It comes with a pre-approved credit limit based on your financial credibility. This limit allows you to make purchases, complete online transactions, and repay the amount within your billing cycle each month.

Nowadays, many banks offer a variety of credit cards. These cards can be made of plastic or even metal, depending on their type. A credit card typically looks like this:

Anatomy of a credit card

A credit card has two sides, front and back. Each part is as important as your password.

Front Side

• Card holder Name: The name of the card owner printed on the card.
  Known as the "embossed name" in payment terminology.
• Card Number: A unique 16-digit number on the card.
  Some cards may have 12 or 19 digits (we will see more in depth).
• Expiration Date: The date when the card expires (format: MM/YY)
• Issuer Name & logo: The bank or financial institution brand name and logo that issued the card.
• Card network logo: Logos of payment networks like Visa, Mastercard, or American Express.
• EMV Chip: A microchip for enhanced security during transactions.
  Difference between magnetic stripe and EMV chip will be covered later.
• Credit card Program/Product: Indicates special features or benefits of the card (e.g., cashback, lounge access).
  Examples:
  
  • ICICI Amazon Pay Card: 5% cashback on Amazon purchases
  • HDFC Regalia First Gold: Includes lounge access

Back Side

• Magnetic Stripe: Stores account data and enables swiping at POS terminals.
• CVV (Card Verification Value): A 3-digit security code used for online transactions.
• Signature Panel: A space for the cardholder's signature.
• Issuer Contact Details: Helpline number for queries or reporting lost cards.

Categories of Credit Cards

There are no fixed categories for credit cards, as their features and benefits can vary widely.
For example:

• Some cards are contactless.
• Others are co-branded.
• Some may be co-branded but not contactless.
• Premium cards might not always be co-branded.

The exact categorization depends on the service provider (bank) and the specific type of card they issue.

Additionally, we have different types of card ownership, such as:

• Primary Cardholder
• Add-on Card
• Supplementary Card

We will discuss all of these. However, for simplicity and better understanding, credit cards can still be broadly categorized based on their main features, as outlined below.

1. Based on Rewards:

• Cashback Cards: Earn cashback on spending.
• Travel Cards: Offer travel-related perks like air miles or hotel discounts.
• Fuel Cards: Provide discounts on fuel purchases.
• Shopping Cards: Offer benefits like discounts or loyalty points.

2. Based on Features:

• Standard Credit Cards: Basic credit cards with no additional perks.
• Premium Credit Cards: Provide high credit limits and exclusive benefits (e.g., lounge access).
• Secured Credit Cards: Require a fixed deposit as collateral.
• Student Credit Cards: Designed for students with lower credit limits.

3. Specialty Cards:

• Corporate Credit Cards: Issued to employees for business expenses.
• Co-branded Cards: Partnered with brands for specific rewards (e.g., Amazon Pay Credit Card).
• Contactless Cards: Tap-and-pay cards using RFID technology.

We will look at each card when we learn concepts like Add-on Card, Supplementary Card, Replacement Card, Program, etc.