Credit Card also termed as plastic money allows the cardholders to pay later for the purchases made now. In short it offers interest free credit facility to the cardholders for a pre-defined period of time. Credit cards have been quite popular simply because of their convenience, as one need not carry cash while traveling or for shopping as it is cumbersome and risky also. A credit card can be a very useful instrument if used wisely or else it can make cardholders life miserable.
It is very essential to understand the terms and conditions about the usage of credit card before one starts using it. There is no harm in asking questions to the credit card issuing company if the cardholder has any doubts related to it. Apart from free credit facility, credit cards offer various facilities like revolving credit i.e. pay minimum balance every month, cash withdrawal from ATM, converting purchase into EMI, balance transfer from another card at minimal or zero cost, etc. Though these facilities offered with credit cards are useful, it can be a long-term debt trap too. Hence, one has to be aware about the implications of availing services offered with cards while managing the debt at manageable level.
Credit Card Benefits
In addition to above benefits attached with credit cards, the credit card issuing companies offer other benefits linked with your spends on the card. There are benefits attached to card like reward points which can be redeemed against renewal fees or gift coupons, waiver of surcharges on railway bookings or on fuel, frequent flyers miles – redeemable points for regular flyers, discounts / cash back on specific purchases, etc.
Depending on the facilities and additional benefits provided on the credit cards, they are generally categorized as Classic Card, Gold Card, Titanium Card, Platinum Card and Privilege Cards and mostly affiliated to international payment gateways like American Express, MasterCard or Visa.
It is always advisable to pay your credit card dues on time so as to have a good credit history and maintaining good credit score in CIBIL. The lenders access this history, whenever the cardholder applies for any credit card or loans in future. A bad history or credit score can be a cause for rejection of credit card or any loan.
Credit Card Apply
If getting a credit card is difficult when you apply for it due to poor credit history or employment in negative listing or any other reasons, one can apply for a secured credit card. These cards are 100% guaranteed and are issued against their term deposit in the bank. This card offers credit limit up to 80% of the value of term deposit earmarked against it. Few of such credit cards issued by the banks are ICICI Bank Instant Gold Card, Kotak Aqua Gold Card, Axis Bank Easy Card, SBI Advantage Gold Card, etc.
Before you apply for a credit card, please be aware that nothing comes for free, hence it is advisable to know all the hidden charges (if any) before you start swiping your card.
Credit Card Information
Credit card is a very convenient option to make payments for goods and services that you may require on a day to day basis. Most shop keepers or service providers will not charge anything extra just because paid by card and not in cash. What’s more the credit card company will give you a free credit period after which you have to pay off the full amount.
Free credit period is not available on cash withdrawals and interest on such cash withdrawals start from the day of withdrawal till payment date.
Off course this financial magic is explained by the fact that most shoppers shop for higher amounts when they pay by card than if they were paying in cash.
The magic works for you only if you make full payment of the entire 100% amount due on the card on the due dates. Almost all cards allow you to pay 5-10% of the amount due as minimum payment and make the balance payment later. This is called rollover facility. But this rollover facility comes at a steep interest cost that can be as high as 55% p.a. Also if you choose to use the rollover facility the free credit period granted to you is withdrawn and you will need to pay interest from the day on which each payment was incurred.
What is a Credit Card?
A credit card is a plastic card issued by a bank or a financial institution to its customer entitling the customer to buy goods and services on the card and pay for them later by a specified date.
Some factors you can keep in mind while taking a card.
There is nothing called as the best credit card in India but you can certainly choose the best credit card for yourself by comparing cards based on the following parameters.
Joining fees: It had become history a few years back but has made a comeback since 2009. Many cards are still available without any joining fee however so compare this before you buy.
Annual Fees: This is the annual charge on the credit card. When you get a free credit card offer in most case it means the Joining fees and the first year’s annual fee is waived and you will need to pay the annual fees from the second year onwards. Understand this offer before accepting it to avoid any issues later.
Reward points encashable at your favourite store or service provider: If you are a frequent user of an airline or a store chain then look for a co-branded card from them since that will not only give you better reward points when you buy from that particular service provider/store chain but also give you reward points on your other spends.
Interest Rate on rollovers/cash withdrawals: If you need to look at this you are taking the credit card for the right reasons. Credit cards are not a good option for taking credit except for very short duration of time.
Eligibility for the card: if you are planning to apply for a credit card for the first time then which card you will be eligible for is perhaps more important than the specific features of the card.
Any promise made by the DSA or even an official of the credit card issuer has no value unless it is in writing or at least on email.
So if you are basing your decision on any such promise make sure you get it in record in some form.
Do not sign blank application forms or documents and keep a copy of all documents submitted to the credit card issuer for your future reference.
Credit Card CIBIL
Get your credit report, Apply online on CIBIL website and follow the instruction given there to get a copy of your own and your guarantors credit report. Check your credit report thoroughly to spot errors and follow the advise given here (cross link) to get any errors corrected. Remember any errors in your credit report can reduce your chances of getting a credit card.