As a first-time credit card user, the prospect of a free credit card might sound highly enticing. But what constitutes “free” in this scenario? Are there no hidden fees whatsoever? And how do Rupay credit cards come into the equation?
In this piece, we will discuss everything that you should know about free credit cards, such as their benefits, characteristics, potential disadvantages, and how to select the best one.
What Is a Free Credit Card?
A free credit card does not require a joining fee or an annual fee. It is usually referred to as a lifetime free credit card because you don’t need to pay an annual fee to maintain it.
Most Indian banks issue these cards to gain new customers, particularly first-time cardholders. Others also offer limited-term promotional offers, where the card is free if you make a fixed amount of expenditure within a year.
It’s also worth noting that ‘free’ applies generally only to joining and annual fees. Other fees—like interest on unpaid bills, late payment charges, or cash withdrawal fees—can still be levied.
Benefits of Using a Free Credit Card
Here’s why a free credit card can be useful, especially for beginners:
1. No Extra Cost to Maintain
You don’t have to worry about paying hundreds or thousands of rupees in annual fees. This is ideal if you’re just starting with credit cards or want a low-cost way to build your credit profile.
2. Build a Credit Score
Responsible use of your free credit card, through timely payment, will help establish a good credit history. You may need this later when you apply for a home loan, car loan, or personal loan.
3. Offers and Rewards
Although they are free, most of these cards offer standard rewards programmes, waive fuel surcharges, or provide cash back on certain purchases. Some banks even offer discounts on eating out or online shopping.
4. Emergency Use
With a credit card, you have a money backup for emergencies such as medical expenses or sudden travel. A free credit card provides this security without yearly fees.
Watch Out for Additional Fees
Even a free credit card can have some subtle charges. Below are some general fees to watch out for:
- Interest Charges: If you do not settle your complete credit card bill on or before the due date, you will be charged interest on the outstanding amount. The interest rates typically fall between 2.5% and 3.5% per month, which can become substantial.
- Late Payment Charges: If you are late in making your payment, a late payment charge will be included in your bill. This also negatively impacts your credit score, making it more difficult to obtain loans in the future.
- Cash Withdrawal Fees: Withdrawing cash from your credit card incurs additional fees. You can be charged approximately 2.5% of the sum or ₹250-₹500 as a minimum, whichever is greater. Additionally, interest accrues from the date of withdrawal.
- Foreign Transaction Fees: When you make purchases on foreign websites or abroad, a foreign transaction fee of approximately 2% to 3.5% of the purchase amount applies.
- Over-limit Fees: If you exceed your approved credit limit, you may be charged an over-limit fee. The additional fee can also impact your credit reputation.
- Reward Redemption Charges: Certain cards may have a charge when you redeem your earned reward points.
- GST: Goods and Services Tax is levied on most charges.
Please carefully read the terms and conditions before using the card.
Nature of Rupay Credit Card
Rupay credit card is India’s home-grown card network, crafted by the National Payments Corporation of India (NPCI). It is gaining popularity, particularly for domestic transactions.
Here’s why one must consider a Rupay credit card:
- UPI Integration: One of the biggest benefits of a Rupay credit card is that it can be integrated with UPI apps such as Google Pay, Paytm, and PhonePe. This makes it extremely convenient to make payments simply by scanning a QR code.
- Local Advantages: Since Rupay targets India, several banks offer zero-cost credit card services under this network, with no annual charges or easily waived-off conditions.
- Extensive Use in India: Although RuPay can be less widely accepted outside the country, it suits the majority of local payments, such as shopping, bill payments, and booking travel.
- Attractive Offers: Certain Rupay credit card versions offer discounts when booking railway tickets, cashback when paying bills for utilities, and special offers at domestic stores.
Conclusion
A free credit card is an ideal way to begin your credit journey without incurring any cost. It enables you to utilise the advantages of a credit card, such as convenience, easy access to funds during an emergency, and reward points, without incurring annual fees. The popularity of the *Rupay credit card has further fueled this possibility with UPI support and localised offers.
However, keep in mind that free is not entirely costless. Read the fine print, use your card responsibly, and pay bills on time. With proper usage, a free credit card can prove to be an effective tool in personal finance management.
