Credit cards are generally categorized by their primary benefit (Discount, Cashback, Points), Spend Category (Travel, Fuel, Grocery), or affiliation (Co-branded with airlines/stores). Additionally, there are generic cards designed for general-purpose spending.
Note that a single credit card can fit into more than one category. For instance, the Axis Airtel Card is a co-branded card, but it functions as a cashback card for specific merchants like Airtel, Swiggy, and Zomato.
Cashback Credit Cards
The simplest of all card types, these cards return a percentage of your spending as cashback. Note that every card has exclusions where certain transactions (like rent or government payments) may not be eligible.
Example: The SBI Cashback Card is currently the most popular choice in India. It offers a flat 5% cashback on all online transactions. Other examples include the Axis Airtel Card and the HDFC Swiggy Card.
Due to the simple and straightforward reward structure, a cashback card is often the first choice for the majority of users.
Co-branded Credit Cards
These cards are issued by a bank in partnership with a specific brand. You receive accelerated benefits when spending with that partner.
These are popular because users who know they spend heavily on a specific brand can maximize their returns.
The Airtel Axis Credit Card is a solid example. If you have an Airtel connection, this card gives you a flat 25% cashback on the bill. It offers straightforward savings.
Category-Based Credit Cards
These cards are designed by banks to attract customers who shop heavily in specific categories, such as fuel, grocery, or dining.
If your budget skews heavily toward a certain category, these cards are for you. If you spend on travel, get a travel card. If you spend on groceries, get a grocery card.
Example: The HSBC Live+ is a card that gives you 10% cashback on dining, food delivery and grocery spending.
Rewards Cards
Instead of giving cashback or discounts, these cards issue reward points. The quality of a rewards card depends on the monetary value you can extract from each point and the ease of redemption.
Example: The HDFC Regalia Gold awards points every time you use the card. You can utilize these points in various ways, such as buying vouchers or transferring them to loyalty programs. You can also adjust them against your credit card bill, though this typically offers the lowest value and is not recommended.