Can we have a credit card without having a bank account?
Yes, you can have prepaid credit cards without having a bank account, which can be used to pay for purchases just like a credit card. However, there must be funds in the prepaid card in order for you to make purchases.
You can have credit cards even if you do not have an active account with the same financial institution. Applicants must note that they must have at least one active account with any financial company to be eligible for a credit card.
Primarily financial institutions look at a couple of aspects of an applicant. On one hand, the CIBIL score of an applicant is checked by the financial institution before issuing credit cards. Typically a score of 750 or above is considered healthy enough for easy approval. NBFCs usually take into consideration this CIBIL score while sanctioning credit card applications. Individuals who maintain a good credit ratio and repay the dues in time possess a higher CIBIL score.
Additionally, companies also look for account details to establish the present financial condition of an applicant. Typically financial institutions look for salary account information since it provides them with the income details of a customer. Documents like salary account statements and salary slips are a must when you apply for credit cards.
Hence, you must hold an account with any financial institution to avail a credit card. You don’t necessarily need to have an account with the credit card providing the company itself.
Benefits of Prepaid Credit Cards:
- Prepaid credit cards can be used to pay for any good or service and customers do not have to worry about the hassles of making cash transactions.
- Open looped prepaid cards can be used to make ATM cash withdrawals by customers.
- Spends would not go overboard as customers can easily plan their expenses and purchase goods only within the limit of the card.
- As long as the prepaid credit card is valid, customers can always get extra cash for urgent purchases and transactions.
- Credit score of an individual is not a major criteria to qualify for a prepaid credit card.
- Prepaid credit cards are the easiest to procure, if the applicant is not looking for any other type of credit card.
- Prepaid credit cards can be used for paying outstanding bills through a customer’s mobile phone.
- For employee not holding a bank account, salaries can be distributed using prepaid credit cards by employers.
- Prepaid cards can also function as a gift card and can be used as travel cards to load currency when an individual is traveling abroad.
Types of Prepaid Credit Cards:
There are different types of prepaid cards available in the market and this varies depending on the issuer.
- Open looped cards – Open looped cards are branded with the network they are affiliated to and are also called open system cards. Every card will carry the brand logo of the affiliate and will be issued by banks in association with American Express, Visa or MasterCard. All open looped cards are accepted at locations and merchant outlets approved banks.
- Closed Loop Cards – The acceptance of closed loop cards is restricted to the affiliated merchant outlet for buying services and good at only those outlets. Gift cards mostly are issued as closed loop cards.
- Semi-Open Looped Cards – As hybrid cards, Semi-Open Looped Cards are accepted by numerous merchant outlets or chains, who are affiliated with the card. Most cards are issued by retail chains or shopping malls and can be used at locations carrying stores with these brands.
- Reloadable cards – Most prepaid credit cards come as reloadable cards, where the customer can add more funds, once the amount held in the card has been used.
- Non-Reloadable cards – Again gift cards fall under this category as once the customer uses the money available in the card, reloading cannot be done. Purchases can be done only up to what is available in the card.
Popular Prepaid Credit Cards in India:
- Axis Bank Prepaid Cards – Smart Pay Card:
- HDFC Bank Prepaid Cards:
- HDFC Bank ForexPlus card:
- State Bank of India:
- YES Bank:
- American Express:
- ICICI Bank:
- Bank of Baroda: