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Fuel cash-back credit cards were the most in demand in India’s Tier-II and III towns and cities in 2023, while travel and e-commerce credit cards saw a higher adoption, according to the latest consumer study by ZET, a fintech platform.
Due to the rising fuel expenses, fuel credit cards have gained popularity in Tier-2 and Tier-3 cities, with a 17 per cent year-on-year growth in 2023. These cards typically provide cashback, rewards points, or discounts on fuel purchases, making them attractive to a wide range of consumers, including those residing in smaller cities and towns.
The three most popular fuel cashback cards were BPCL SBI Credit Card, Indian Oil Kotak Credit Card, and IDFC HPCL Credit Card.
SBI BPCL Credit Card, launched by SBI in collaboration with Bharat Petroleum, gives 4.25 per cent value-back on fuel purchases at BPCL petrol pumps. Besides, it offers 5X accelerated rewards on multiple categories, such as groceries, movies, dining, etc. For a card with a low joining fee of Rs 499, the rewards are quite decent, as per Paisabazaar.
Up to 13X Reward Points
You can earn up to 13X reward points on your fuel transactions at BPCL petrol pumps. Besides this, you can also earn up to 5X reward points on other selected categories as per the below details:
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4.25% valueback (13X reward points equivalent to 3.25% + 1% fuel surcharge waiver on every transaction of up to Rs. 4,000) at any BPCL petrol pump
5X reward points on every Rs. 100 spent at groceries, departmental stores, movie tickets, and dining (Up to 5,000 reward points per month)
1 reward point for every Rs. 100 spent on non-fuel retail purchases
If you are looking for an entry-level credit card, with fuel benefits, the IndianOil Kotak Credit Card is a good option, as per Paisabazaar. At an annual fee of Rs. 449, the card is highly rewarding as you get up to 4% value back in the form of reward points across IndianOil fuel stations and dining, groceries, and other retail transactions. You can easily maximize the benefits of this card if you prefer IOCL petrol pumps over others.
The value back is offered via 24 reward points on every Rs. 150 spent. You can earn maximum 1200 reward points per statement cycle, under this feature.
Additionally, the card offers 1% fuel surcharge waiver on transactions between Rs. 100 to Rs. 5,000 with maximum surcharge waiver of Rs. 100 per statement cycle only at IndianOil outlets.
The maximum value benefit you can avail with this card is Rs 400 per month, based on the reward redemption calculation of 1 reward point= Rs. 0.25, thus 1200 reward points= Rs. 300+ 100 maximum surcharge waiver.
IDFC FIRST Bank, in collaboration with HPCL, has two co-branded fuel credit cards, namely HPCL IDFC FIRST Power and HPCL Power Plus. These IDFC FIRST credit cards are a great option for HPCL fuel loyalists who are looking to save on their fuel expenses. "These cards come at a low annual fee and with substantial savings in the form of reward points on HPCL fuel transactions. Apart from fuel, the cardholders can also earn accelerated rewards on grocery, utility and IDFC FIRST FASTag recharge," said Paisabazaar.
Travel cards
With increasing accessibility to travel and growing aspirations for leisure among people in Tier-2 and Tier-3 towns and cities, travel credit cards also gained traction. Demand for travel credit cards grew the fastest in 2023, witnessing a 27 per cent growth on year as their offerings like air miles, hotel discounts, or travel-related rewards, are increasingly getting popular among consumers in India’s hinterland, noted the study.
The increasing connectivity and infrastructure development in these cities also contributed to the rise in travel credit card usage. As more people from these regions are exploring travel options, the appeal of such cards is likely to continue growing, it added.
Maximum demand was for SBI IRCTC, Axis Vistara, and IDFC Vistara.
E-commerce cards
E-commerce cards
The third most popular card among India’s Tier-2 and 3 cities was e-commerce due to increased internet penetration and improved logistics and delivery ecosystem. The demand for e-commerce cards in 2023 saw a 24 per cent YOY rise on the back of their increased popularity due to specific benefits like rewards, cashback, or discounts on online purchases. These cards are often marketed with tie-ups with major e-commerce platforms, offering exclusive deals and
incentives for online shopping.
The three most popular credit cards were Tata Neu HDFC Credit Card, Swiggy HDFC Credit Card, and Axis Flipkart Credit Card, according to the study.
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“In India, credit card penetration is low at just 5% of the population but we are witnessing a rise in adoption in the last two years and as per RBI’s estimates the number of credit card owners could rise to 10 crore by early 2024 from 7.5 crore in April 2022. This rise in adoption has been accentuated by factors like increased urbanisation, rising disposable incomes, growing aspirations, and the government's push toward digital transactions. It is encouraging to see that India’s Tier-2 and 3 cities are scripting a new chapter in the growth of credit cards as we drive financial inclusion in newer markets," said Manish Shara, Co-Founder, and CEO, ZET.
The study also suggested that there was a 19 per cent (YOY) growth in New-To-Credit (NTC) consumers with almost 50 per cent being less than 25 years of age. The most preferred cards for NTC consumers were AU Small Finance Bank Credit Card, SBI Credit Card, and Axis Bank Credit Card.
