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Credit, Charge or Debit?

Credit card: This piece of plastic enables you to make purchases and payments and pay for them at a later date. Within the credit card category you can opt for either Classic, Executive or Gold. The only difference being the benefits extended to each category. The more premium the card, the higher the amount of credit sanctioned with more benefits (such as higher insurance cover, accessibility to airport lounges, travel discounts and arrangements, free global calling card). Some banks may even offer a lower interest rate on revolving credit. And what's the catch? A higher joining fee, annual fee as well as income requirement.

Charge card: Credit cards with no pre-defined spending limit. If on a regular credit card your credit line is Rs 30,000 a month, you cannot exceed this limit since no payment will be made by the bank over and above this amount, unless you call and request a temporary higher limit. On a charge card, no such hassles. With no limit to your spending, your only obligation is to clear the entire amount that appears in your billing statement. With no option to revolve credit, be careful of how much you spend or it could wipe you out.

Debit card: Basically, no free credit line. A credit card requires the bank to make a payment to the merchant establishment and the cardholder has to settle the bill later. Not so in the case of a debit card. Here, the value of the transaction is deducted immediately from his/her bank account. The moment the card is swiped at a merchant's debit terminal, an electronic message is sent to the bank where a check is made to see if the customer has sufficient funds in his account. Once that is confirmed, the amount of sale is debited from the customer's account and credited to the merchant's account simultaneously. Unlike a credit or charge card, with a debit card you are required to have an account with the bank issuing the card.

Since the card allows you to have direct access to your account, you have no credit limit. You can spend till all the money in your account is wiped out. Either this will wipe you out or it will keep you in check. Neither do you have to bother about settling monthly bills. And, best of all, you will never end up in debt. If you don't have the money, the transaction won't be cleared.

And, if somebody pinches your card and is aware of your PIN- personal identification number (highly improbably), you could end up in the bread line.

So what fits you?

You: A substantial bank balance.
Card: Debit.
Reason: Since the transactions are directly debited from your account, your credit line will be dependent on the funds in your account.

You: Investments parked in various instruments with a low bank balance.
Card: Credit.
Reason: Debit is out since you don't have much funds to debit instantly from your account. Should you overspend, you can always revolve credit till you have the funds to clear the bill.

You: An impulsive buyer.
Card: Credit.
Reason: Since you cannot revolve on a charge card, your bank balance could shrink dramatically in just one spending spree. Similarly for a debit card unless you don't keep much money in your bank account.

You: No bank considers you worthy enough to issue a credit card .
Card: Debit.
Reason: Since funds have to be deducted immediately from your account, there is no credit risk to the bank.

You: The company picks up all the travel and entertainment bills.
Card: Charge card.
Reason: In this way you won't have any preset limit to hamper spending.

BANK	CARD	JOINING FEE (Rs)	ANNUAL FEE (Rs)	REVOLVING CREDIT (% per month)	CASH ADVANCE FEE (% per transaction)	INTERNATIONAL ACCEPTANCE
American Express	Credit card	None	995	2.39	2.5/ min Rs 75	Yes
ANZ Grindlays Bank	Gold	1000	1500	2.9	2.5	Yes
	Classic	100	700	2.9	2.5	Yes
Bank of Baroda	BoBCard Gold	1250	1250	3	2.75	No
	BoBCard Exclusive	1000	1000	3	3	No
	BoBCard Silver	400	400	3	3	No
	BoBCard	100	100	commercial rate # 3		No
Citibank	Gold	None	2000	2.95	2.5/ min Rs 50	Yes
	Silver	None	750	2.95	2.5/ min Rs 50	Yes
HSBC	Gold	500	2000	2.95	Rs 75	Yes
	Silver	300	700	2.95	Rs 75	Yes
ICICI	True Blue	150	300	2.95	2.5/ min Rs 50	No
	Sterling Silver	150	600	2.5	Same as above	No
	Solid Gold	300	1200	2.5	Same as above	Yes
Stanchart	Gold	1000	2000	2.5	2.5/ min Rs 75 or Rs 500 (ATM or bank  transaction respectively)	Yes
	Executive	400	1100	2.95	Same as above	Yes
	Classic	100	700	2.95	Same as above	Yes
State Bank of India	SBI credit card	250	500	2.5	2.25	No

# The cardholder has to maintain an account with the bank and every fortnight a bill is sent to the branch and the amount debited from his/her account. If there are insufficient funds in the account, then the rates charged on overdrafts are levied on the balance amount to be paid.

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