Floater, supplementary, or add-on credit cards are becoming popular for families seeking financial flexibility. These cards allow the primary cardholder to share their credit limit with a family member, such as a spouse, making it a convenient way to manage shared expenses. Let’s dive into the details of floater credit card, how they work, and who can benefit from them.
What is a Floater Credit Card?
A floater credit card is essentially an additional credit card linked to the primary cardholder’s account. A family member, typically a spouse or dependent, can use the card for purchases, but the credit limit remains shared between the two cards.
Obtaining a floater card is more straightforward than applying for a new credit card. Since it is tied to the primary cardholder’s account, there’s no need for additional documentation or verification. However, it is essential to note that the total credit and cash withdrawal limits are split between the primary and floater cards.
Example:
If the primary cardholder’s credit limit is ₹10 lakh, this amount is shared between the primary and floater cards. Similarly, the cash withdrawal limit is distributed between the two cards.
Key Features of Floater Credit Card
Shared Credit Limit:
The primary and floater cards share the same credit limit. This means the combined usage on both cards cannot exceed the assigned credit limit of the primary card.
Separate Billing Statements:
Floater credit cards generate separate billing statements. Each cardholder will receive a statement detailing their respective transactions and the minimum and total due amounts. Payments must be made separately for each card.
Reward Points:
Reward points earned through transactions are tied to the respective cards. These points cannot be transferred or pooled between the primary and floater cards.
Eligibility for Floater Cards:
Some banks, like HDFC Bank, require the floater cardholder to have the same registered mailing address as the primary cardholder. If the addresses differ, they must be updated to match before the card is issued.
No Limit Enhancement:
Applying for a floater card does not automatically increase your credit limit. Temporary limit enhancements on the primary card may also disqualify the account from receiving a floater card.
Virtual Credit Card Options:
Many banks offer virtual floater credit cards that enable UPI payments and online transactions. These virtual cards share the same credit limit and features as the primary card, providing a convenient digital payment option.
How Floater Credit Cards Work
Floater cards are issued based on the primary cardholder’s account. The credit limit, cash withdrawal limit, and transaction capabilities are shared between the two cards.
For instance, if the primary card has a credit limit of ₹5 lakh and the floater cardholder purchases ₹50,000, the remaining credit limit for both cards is ₹4.5 lakh.
It is important to remember that separate payments must be made for each card’s outstanding balance. Incorrect or excess payments to one card will not automatically adjust the balance of the other card. Non-payment on either card can lead to late fees and penalties.
Benefits of Floater Credit Cards
- Shared Financial Responsibility:
Floater cards allow families to share expenses without requiring separate credit card accounts.
- Convenience for Family Members:
Family members can purchase independently, even when the primary cardholder is unavailable.
- Virtual Payments:
Family members can make UPI and contactless payments seamlessly with virtual floater cards.
- No Additional Documentation:
Floater cards are issued without extra paperwork, making them quick and easy to obtain.
- Custom Spending Control:
The primary cardholder can monitor and control spending on the floater card, ensuring responsible usage.
Who Needs a Floater Credit Card?
- Frequent Travelers: If you travel often and want to ensure your family can access funds, a floater card can be a lifesaver.
- Families in Different Locations: If your family resides in a different city, a floater card allows them to manage expenses without disruptions.
- Digital Payment Users: Those relying heavily on UPI and contactless payments will find virtual floater cards especially useful.
Can Floater Credit Card Increase Your Credit Limit?
No, floater cards do not inherently increase your credit limit. The combined credit utilization of the primary and floater cards determines the overall usage. Banks may consider increasing your credit limit over time based on your repayment history and consistent utilization patterns.
Points to Consider Before Opting for a Floater Credit Card
- Shared Credit Limit: Ensure the limit is sufficient for your family’s needs.
- Separate Billing: Be prepared to manage and pay separate statements for each card.
- Non-Transferable Rewards: Reward points cannot be combined across the cards.
- Eligibility Criteria: Check the bank’s guidelines for issuing floater cards, including address requirements.
- Usage Monitoring: Keep track of spending on both cards to avoid exceeding the limit or missing payments.
Conclusion
Floater credit cards are a practical and flexible financial tool for families, providing convenience and shared access to funds. Whether used for household purchases, travel expenses, or UPI payments, these cards make managing family finances more efficient. Understanding their features and limitations lets you decide if a floater credit card suits your needs.
