All about Credit Card

Introduction 

A credit card is a financial instrument that lets the user make purchases and pay for them later. Since it has a pre-loaded balance, the card issuer allows the user to settle the balance without incurring interest up to 50 days from the payment date.

The cardholder can pay the minimal amount due (often 5% to 10% of the total amount owed) to avoid penalties. However, the credit card company's interest rate will be applied, and the remaining amount will be carried over to the next month.

What is a Credit Card?

You can pay for your goods over time with a credit card. By using your credit card, you are taking out a loan from the credit card company, which you must repay at the end of each month.

Before purchasing a credit card, you should be aware of the following characteristics to comprehend its meaning fully:

• Credit card companies issue credit cards to those who have steady incomes.
• You can easily get a credit card if your credit score is good.
• Your credit limit as a credit card user will be three to five times your monthly net income. Each bank will have a different approach to this.

Although well-known banks offer credit cards, Visa, MasterCard, and RuPay provide the payment gateway. These payment processors, however, are not allowed to put extra conditions and limitations on the card. Credit card firms choose the interest rate, reward points, and minimum amount owed, among other factors.

You can get a credit card by using your fixed deposit.

Credit Card Types

Here is a thorough summary of the various kinds of credit cards that are available:

• Travel Cards

Due to their many advantages, travel credit cards are very popular. These cards offer rewards for both domestic and international travel. Most banks provide travel credit cards through partnerships with airlines or travel agencies.

Air miles can be earned by customers who make travel-related transactions with a travel credit card. In addition, certain travel cards allow users to enter airport lounges.

To book flights and upgrade seats, customers can exchange the reward points they accrue on these cards for air miles.

Travel insurance, eating packages, golf packages, hotel and vacation packages, and other perks are also included with travel cards.

• Cards for Cashback

Depending on the spend category, customers who use cashback credit cards might receive cashback on their transactions ranging from 5% to 20%.

You can get cashback on bill payments, movie ticket purchases, shop purchases, meal bills, and grocery purchases.

All cashback cards include fuel surcharge exemptions, annual fee refunds, eating and shopping privileges, worldwide acceptance, rewards programs, balance transfers, and other perks.

• Reward Cards

Reward credit cards are renowned for offering a variety of benefits with every purchase.

Through all of their card transactions—online, in-store, etc.—cardholders can accrue reward points. They can also receive reward points as a birthday present, welcome gift, renewal bonus, and other incentives.

By spending a specific amount within a particular time frame, cardholders can get points. These reward points can be exchanged for goods and services, including cashback offers, air miles, travel discounts, and more in the rewards catalogue. Customers can pay for items using certain credit cards for instalments.

• Balance transfer cards

A balance transfer credit card allows you to shift your existing credit card debt, usually from a different bank, to a new card that offers a lower or 0% interest rate for a limited period, typically between 3 to 18 months. This can significantly reduce the interest burden and help you repay your debt faster. It's particularly useful for those who are stuck paying high interest rates (often 30–40% annually) on older credit card balances. However, balance transfers often come with a processing fee ranging from 1% to 3% of the transferred amount, and if the debt isn't cleared within the promotional period, regular interest rates kick in—sometimes even higher than your original card. Missing a payment can also cancel the low-interest benefit. While these cards can be a smart way to consolidate and manage debt, they require financial discipline and a clear repayment plan to truly work in your favor.

• Cards for Students

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• High-end cards

The "Premium" or "Signature" credit cards offered by most banks offer fantastic lifestyle perks.

Flexible spending restrictions, access to premium airport lounges, concierge services, free insurance, rewards programs, worldwide help, chartered boat and flight services, surcharge exemptions, and coupons for travel, retail, and lodging distinguish premium credit cards. Redeeming rewards obtained with these cards offers additional choices.

Advantages of using a Credit card

 The following are some essential benefits of credit card use:

• Some credit cards let you take out cash up to a particular amount in an emergency and don't charge interest for 45 to 50 days. In times of financial crisis, it is helpful.
• Credit cards offer comprehensive travel insurance and personal accident coverage, which is one of the main advantages that makes them alluring.
• Using credit cards allows you to accrue a large number of reward points that can be used for a variety of purposes.
• When it comes to travel, credit cards are crucial. By offering expedited check-in and free lounge access at Indian airports and train stations, they offer a unique experience. In addition to these, more than 280 eateries provide food discounts.

Credit card and credit score relationships

In addition to allowing you to shop on credit, credit cards also help you raise your credit score. If you understand how to use a credit card, how to use the credit period, and how to pay back the amount used on time, you can raise your CIBIL score. As a result, you can get loans more easily.

FAQs

• What would my credit card's limit be?

• Several factors, including provider, CIBIL score, and income, might affect your credit card limit.

• Will a late credit card payment result in fees?

• Yes, you will incur fines, and your CIBIL score may suffer due to the late payment.

• Can I apply for a credit card online?

• Indeed, there are several simple ways to apply for a credit card online, including: Through third-party apps and websites, mobile banking, and the official gateway

• Which credit card options are available?

• Each institution has different credit card offers and perks. Contact the card's official issuer to find out all of the card's details.