The credit card market in India has witnessed a high growth, especially in the past 5 years. This can be attributed to the increasing penetration of point-of-sales (POS) machines combined with the marketing efforts of banks and telecom operators. In addition to this, banks have made outstanding efforts when it comes to understanding customer lifestyle requirements. There are cards available to match the requirements of every customer segment, be it travel or shopping, dining or entertainment. The recent launch of Flipkart – HDFC co-branded credit card targeted to online shoppers, is an example of this diversification.
Credit Cards for Students in India
However, there still remains a segment of credit cards that have not been explored by banks in India. Though popular in the west, the concept of students’ credit card is a new phenomenon.
A student credit card is offered to students at undergraduate or graduate level. It has student friendly features such like low interest rates, no income eligibility limit, no joining or annual fees, low cash limit etc. Such cards have simpler joining formalities; for instance, there is no need of submitting employment forms or I.T. returns. These cards only require the submission of proof of residence and proof of enrollment in an educational institute.
While, several banks offer credit cards to students of premiere institutes at both undergraduate and graduate level, most banks do not have specialized cards targeted to students. Although, secured credit cards or credit cards against a fixed deposit has picked up in India, we are yet to see an influx of unsecured credit cards for students, in general.
1) Credit cards against fixed deposits
Secured credit card or credit card against FD is the best way for a student to get a credit card in India. A secured card requires a fixed deposit that becomes the credit line for that account. Unlike prepaid cards, secured credit cards can help establish credit history, as the cardholders payment activity is reported to credit bureaus. Following are the top secured credit cards available in India:
|CARD||SBI Student Plus Advantage Credit Card||ICICI Bank Instant Platinum Credit Card||AXIS Bank Insta Easy Credit Card|
|JOINING FEE||Nil||Nil||₹500 (Reversed upon spends of ₹5000 within first 45 days)|
|ANNUAL FEE||₹500 (Reversed if total purchases exceeds ₹35,000)||Nil||Nil|
|FINANCE CHARGES||Upto 2.25% per month or 27% per annum||2.49% per month or 29.88% per annum||2.50% per month or 34.49% per annum|
|MIN FD AMOUNT||₹5000||₹20,000||₹20,000|
|CREDIT LIMIT||70% of the FD amount||85% of the FD amount||80% of the FD amount|
|FEATURES||1 Cash Point for every ₹100 spent,2.5% Value Back on all departmental store & grocery spends,10x Reward Points on international spends,2.5% fuel surcharge waiver||₹100 off on movie tickets at Book My Show,3 PAYBACK points on ₹100 spent,15% savings at over 800 restaurants in India,2.5% fuel surcharge waiver||6 eDGE points on ₹200 spent,12 eDGE points on ₹200 spent – international spends,100 points on your first online transaction,2x points for spends in birthday month,2.5% fuel surcharge waiver|
2) Add on credit cards
Another great way for students to own a credit card is getting an add-on cards on existing credit cards held by their family members. An add-on card nearly has the same features as the primary card, but depends from bank to bank.
Despite the fact that an add-on card has the name of the student, the responsibility of bill payment lies solely on the primary credit card holders. Thus, students must make sure that they are using this financial instrument carefully.
The efforts of the Reserve Bank of India to make the economy cashless has led to several positive developments in the financial services market. Growing internet penetration, along with a high rise in low-cost smartphones has ushered tremendous increase of electronic transactions in India. Financial services will evolve further and we will surely see banks offering more varieties of cards, including credit cards for students.
In our next post, we will highlight the best credit cards for students’ traveling abroad for their education.