A credit card is an instrument issued by financial institutions that lets you borrow money up to a pre-approved limit to pay for your purchases. Imagine what you would do when you didn’t have cash but wanted to make a purchase? The answer may be different for everyone. But those who have a card will say that there is no tension; they will pay the bill with a card. You can shop without cash with a Credit card.
Simply put, it is like a loan account. With this, you keep paying your shopping bills and pay your Credit Card bill once at the end of the month.
Utilizing a card wisely can make your economic existence a lot easier. It helps you with:
Management of regular expenses
You can pay for your regular expenses with the help of a card. Using a card for everyday expenses also helps you keep track of them.
Avoiding fraud and mistakes
Paying online with a debit card can prove to be dangerous. The danger of paying with a debit card is significant because it can take away the entire amount linked to your bank account in one go.
A Credit Card can be very helpful in an emergency. It is the easiest option of money compared to the time taken to withdraw more money from the bank account or process the loan.
Maintaining a Good Credit Score
If you spend money with a card and pay it on time, you can retain a better credit score. This helps you a lot in the long term, mainly when applying for business loans or personal loans.
Who issues the credit card?
Credit cards are issued by banks as well as Non-banking Financial Institutions (NBFCs). Credit card holders can make purchases or pay for various services by borrowing credit (money) from these entities. Apart from this, the credit card offers benefits like rewards, cashback, loans on interest-free tenure, etc.
What is the minimum payment on a credit card?
This is usually a small amount of the total outstanding dues. By making the minimum payment, cardholders can avoid the late payment penalty, which will be levied on the credit card.
Eligibility criteria for a Credit Card
Before giving a credit card to any of its customers, any bank puts forth some terms and conditions:
- Banks see the applicant’s profession and income before providing credit cards to their customers. On this basis, the credit card limit of a cardholder is decided.
- Before giving credit cards, the previous details of the customer are also checked. It is verified whether the cardholder has taken a loan from any bank before. If taken, whether payment made from time to time or whether there is a record of bounced payments
- If applicants have purchased something on EMI and its payment has not been completed yet. The banks may reduce your credit card limit.
- To get a credit card, your relation with this bank should also be good. That is, your savings or regular account should reflect a health financial position.
These are some rules, to keep in mind when approaching a bank to get a credit cards. Although many other things are also taken care of by a bank. You can also check with your bank’s relationship manager for further details.
How does your card work?
Do you know how your card works? Let’s try to see the answer to this question.
In using a Credit Card, you borrow money from the card-issuing bank, which you must repay within a stipulated time.
Most credit cards offer a 60 days period to pay the money – If you do not pay the card bill on time, you will have to pay a penalty for late payment. You get a debt-free period of 50-60 days between the generation of the card bill and the purchase.
What is a Credit Card EMI Calculator?
A credit card EMI calculator is a tool that lets you calculate the monthly repayment schedule for EMI possession on your credit card & allows you to know the total interest amount.
How does the Credit Card EMI Calculator work?
First, you can add in the amount of the transaction and tenure wanted to pay it over and hit on “Calculate.”
The Credit card EMI Calculator shall immediately exhibit the breakup and repayable amount towards the agreement.
You could apply to the breakup of your payable EMIs towards the principal, interest, and processing charges and search through the entire proposal of instalments in the amortization table.