Pros and cons of a shopping credit card | Mint

Pros and cons of a shopping credit card



The charges on a shopping credit card include one-time joining fee, annual maintenance fee and over-limit fee

If you love to shop, especially online, a shopping oriented credit card can get you significant rewards. These can come in the form of discounts, reward points, special bonuses and conversion of large purchases into equated monthly instalments (EMIs) at no extra cost.

Sachin Vasudeva, associate director and head of credit cards,, said that shopping credit cards are different from regular credit cards in terms of extra privileges. On some cards, it may be accelerated rewards across specific shopping categories, while on others, it could be in the form of co-branded benefits. For instance, using a Flipkart Axis Bank Credit Card when purchasing an item from Myntra (Flipkart owns Myntra) would be a good choice as you will get 5% unlimited cash back. However, suppose you do not want your online shopping benefits limited to a particular brand or website. In that case, you can go for shopping credit cards that are better for general online savings, such as HSBC Cashback Credit Card or HDFC Millennia, added Vasudeva.

However, it is pertinent to note that if you carry a balance on your shopping credit card, the bank will charge interest just like with a regular credit card. Raj Khosla, founder and MD, said, “The charges for shopping credit cards are similar to regular credit cards, depend entirely on card type and the issuing institution. The typical charges for a shopping credit card include a one-time joining fee, annual maintenance fee (almost every bank offers a spend-based waiver on annual fee), late payment fee, annual percentage rate or APR for overdue payments and over-limit fee."


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Here are some advantages of using shopping credit cards.

These are in addition to benefits that apply to credit cards such as interest-free period. An interest free period is the time given to you, to settle your credit card bill each month and it allows you to buy goods and services without paying interest for a short while.

Accelerated rewards: Several shopping credit cards provide accelerated reward points on shopping. These points can bring significant savings to users if used judiciously. Issuers also tend to have tie-ups with big online and offline retail brands, which translates into higher or additional discounts. However, you should choose a card according to your shopping preferences to maximize the benefit.

Financing large purchases: Shopping cards make it easy for you to buy something now and pay for it over a time through easy EMIs. “While all cards provide this facility, shopping credit cards are usually optimized to make this easier and more rewarding. For instance, while you may be able to convert your purchase into a no-cost EMI on your shopping card on most platforms, that may not hold true for all credit cards," said Adhil Shetty, CEO,

Co-branded benefits: There are multiple co-branded shopping credit cards with a large number of online and offline retailers.

These help you access ‘sale events’ at the merchant in advance compared to regular customers and benefit from lucrative cashback programmes. This way, with co-branded shopping credit cards, you can make the most of your spending with the partner brand.

However, you may not get all benefits on a single shopping credit card, so you should choose the card according to your needs and spending preference.

Here are some disadvantages of using shopping credit cards.

Rewards come with limitations: Not all reward points accumulate for all time. “Many of them may be valid only for 1-2 years and expire post that. So, you should be wary of that and use them within the time limit," said Shetty.

You get lower rewards on other categories: When you don’t spend on shopping and use a shopping credit card to buy other products, you earn lower reward points.

Khosla said, “The rewards on other categories of spends like fuel, travel, health are relatively lower as compared to regular credit cards. In the case of co-branded credit cards, the benefits in terms of cashback and bonus rewards are not available at other channels and competing retailers."

Know the hidden T&C: There may be several hidden terms and conditions related to minimum transaction value, maximum cashback/reward points, etc.

“For instance, some cards offer cashback on online spends only over a certain spend threshold, so for smaller spends online, you would not get any benefit," said Vasudeva.

Mint Take

Shopping credit cards cater to a full spectrum of customers with varying spend patterns and diverse preferences. Even within the shopping credit cards grouping, there is a further distinction between online and offline shopping. Accordingly, you should utilize a card that best suits your spending habits, whether online or offline. However, do not get this type of card if you are unable to control your spending and pay the monthly bill on time.

So, if you spend significantly on shopping, you can consider getting customized shopping credit cards as they provide enhanced reward points on shopping compared to a regular credit card. Additionally, shopping credit cards offer enhanced discounts over and above the existing discounts at partner merchant outlets.

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