Lifetime-free credit cards often come bundled with a bouquet of entry-level benefits that are adequate enough to lure folks who are new to credit and first-time credit card applicants.
Some lifetime-free credit cards are packed with features and benefits that are of high relevance even for customers who carry fee-only cards. These credit cards command low-to-moderate upper limits on discounts, cashbacks and reward points.
Key benefits
Zero fee: The absence of a joining or annual fee remains the supreme benefit of lifetime-free credit cards as those who are unsure of their spends can obtain these cards to start their respective credit relationship with a bank.
Basic eligibility: Lifetime-free credit cards are offered with basic eligibility checks. Lower income requirements and a moderate credit score can get you a lifetime-free credit card. Higher serviceability even for tier-3, semi-urban and remote areas makes these credit cards a go-to option for many consumers.
Easier approvals: The application-to-approval-to-dispatch timeline for lifetime-free credit cards is relatively shorter than for premium cards. Quick KYCs, minimal documentation and easy onboarding are boons for new-to-credit individuals and first-time applicants.
Adequate perks: Irrespective of zero annual/renewal fee, lifetime-free credit cards offer a number of passable entry-level advantages that enhance the credit card ownership experience. Benefits such as bonus reward points, fuel surcharge waiver, gift vouchers on card activation, free OTT memberships, discounts and cashbacks during sales make these cards more tempting.
Convenience of a credit card: It provides an interest-free period of up to 50 days. Along with the security of a credit limit, which can be used in case of emergencies.
Who is it best suited to
● Lifetime-free credit cards can be a great option for first-time credit card applicants and new-to-credit customers who look forward to inculcating a discipline in terms of utilising credit and repaying within the prescribed time period.
● Lifetime-free credit cards can serve as an important instrument for people who wish to build or improve their credit score. This way, they can become eligible for other small and big-ticket facilities including a personal loan, auto loan, and home loan in the future.
● Given the credit-deficient demographics of India, the emerging need for interest-free credit and low penetration of credit cards in tier-2 and 3 and rural locations, lifetime-free credit cards are paving the way for consumers, as well as for lenders, to comprehensively improve the level of financial inclusion.
● Customers who want to make use of discounts and cashbacks offered by the bank at merchant outlets.
Limitations and drawbacks
Fewer range of benefits: The scope and bandwidth of the benefits of lifetime-free credit cards remain limited. The reward ratios along with the added perks are lower in such cards.
Upper caps on rewards: Lifetime-free credit cards often come with strict caps on rewards, discounts and cashbacks. Features such as 10X reward points, up to 10% discount/cashback may be alluring enough, but you should remain wary before obtaining a card.
A quick read of the most important terms and conditions of credit cards, understanding the embargo for a set of merchant partners and the provisional structure of rewards points can be quite helpful in shortlisting a lifetime-free credit card.
Should customers with premium cards carry lifetime-free credit cards?
Even premium cardholders should keep lifetime-free cards in their portfolios. One or two such credit cards can help save thousands in a card membership year if the customer is able to align his spending pattern to extract the maximum value from the card.
There is absolutely no harm in holding lifetime-free credit cards alongside premium credit cards if all the cards justify the returns on spends. Obtaining a premium card under a limited-period lifetime-free offer can be a true blessing as it will magnify the return by eliminating the cost of card membership.
The important caveat with credit cards is that customers should spend only the amount that they can repay in full before the due date to avoid falling into a debt trap. Users should be careful of getting too many lifetime-free cards in a short period – while it may not impact them monetarily, it can negatively affect their credit scores, which may make it difficult to take a loan in the future.
Raj Khosla is founder and MD of MyMoneyMantra.com
