[2024] What is Credit Card and its Benefits
What is Credit Card and its types
What is Credit Card and its Benefits? How to Use Credit Card? Types of Credit Card in India: Friends! At present, people’s inclination towards online shopping is increasing. Due to this trend, many types of payment options are also emerging.
These options include credit card, debit card, net banking and UPI etc. Many types of payment options are available not only online but also in offline shopping. You all must have heard about one of these options, credit card.
What is Credit Card and its Benefits
Anyway, in today’s digitalization era, the practice of cash transactions is decreasing very much. In its place, payment options like credit cards are being used more. But people often have a question, what is a credit card? So friends, if you also want to know what is credit card and how is credit card used? Want to get complete information related to etc. in detail. So stay connected with this article till the end.
However, you will find many articles related to credit cards on the internet. But we believe that you cannot get better information than this article anywhere.
We promise that we will try to provide completely accurate information about the credit card. So friends, now without wasting time let us know about credit cards in brief details.
What is Credit Card
Credit card is a type of credit account provided by a financial institution or bank. It is a plastic made card which is used to pay shopping bills. A pre-approved limit is set for the credit card through which you can make cashless transactions or payments as per your convenience.
Many other factors such as credit score, credit history and your income are also checked for your credit card limit. If you pay the credit card bill within the stipulated time period, you do not need to pay any interest.
But if you pay the credit bill after a certain time period then a fixed interest rate starts charging on your credit limit. “What is Credit Card? How to Use Credit Card? Types of Credit Card in India”
How many types of credit cards are there? (Types of Credit Card)
Credit cards are majorly divided on the basis of rewards, low interest and credit building cards. Some major types of credit cards are as follows:
- Standard Credit card
- Rewards Credit Card
- Charge Credit Card
- Sum Prime Credit Card
- Balance Transfer Credit Card
- Student Credit Card
- Secure Credit Card
- Entertainment Credit Card
- Travel Credit Card
- Fuel Credit Card
- Shopping Credit Card
- Secured Credit Card
- Lifestyle Credit Card
- Limited Purpose Card
- Business Credit Card
- Basic Credit Card
- No Annual Fee Credit Card
- Low Interest Credit Card
- Cashback Credit Card
- Kisan Credit Card
Out of all the above credit cards, the most used in India are travel credit card, fuel credit card, rewards credit card, shopping credit card and secured credit card.
- Travel Credit Card: Travel credit cards provide discounts on all airline ticket bookings, bus, rail ticket bookings, hotel bookings and cab bookings etc.
- Fuel Credit Card: You can reduce your transportation expenses by using fuel credit card.
- Reward Credit Card: In reward credit card, you get reward points on various types of purchases and transactions.
- Shopping Credit Card: Through Shopping Credit Card, you can avail discounts while shopping at online and offline partner stores. Besides, cashback, discount vouchers and other offers are also available on shopping credit cards.
- Secured Credit Card: Credit card holders can strengthen their credit score through secured credit cards. A secured credit card offers you attractive interest rates. But to increase your credit score, you will also have to use the credit card properly.
Which is the Best Type of Credit Card?
It is really difficult to say which is the best credit card. In fact, some credit cards offer low interest rates. Other credit cards are best for offering the best reward points.
Similarly, some other types of credit cards in India attract people for their high level of benefits such as access to golf courses, airport lounges, etc. But still, if we talk about the best credit card, then only this low interest and reward credit card can be considered.
However, to get relief from excessive interest and penalties, using a bank transfer credit card can also be a wise decision. The time period provided by the bank to repay the bank transfer credit card ranges from 6 months to 21 months.
But if you use bank transfer credit card. So some fees are also applicable on it which is 5% of the total amount of the credit card.
If you are in a dilemma as to Which Bank has the best Credit Card? So you can choose from Yes First Preferred Credit Card, HDFC Regalia Credit Card, SBI Card Elite, Axis Bank Credit Card, Simply Click SBI Card, Citi Premier Miles Credit Card and SBI BPCL Octane Credit Card. “What is Credit Card? How to Use Credit Card? Types of Credit Card in India”
Eligibility For Credit Card
To apply for a credit card, the minimum age of the applicant should be 18 years. Apart from this, it is necessary for the applicant to be employed or self-employed. Meaning that it is an essential aspect for the applicant to have a solid source of income. Apart from this, the credit history of the applicant should also be positive.
Documents Required For Credit Card
Before applying for a credit card, the applicant should arrange some important documents which are as follows:
Personal Identity Card: Aadhar Card, Voter ID Card
Residence Certificate: Driving License and Passport etc.
How to Use Credit Card?
Using credit card can be very beneficial. But you should act wisely while using it. Actually, you use credit card for bill payment and transactions.
Apart from this, credit card is known to provide many benefits. Let us know how you can get the right benefits from credit card.
- Choosing the right card: For whatever item you want to purchase. Select credit card also on the same basis. For example, if you travel a lot then you should use a travel credit card. So that you can get discount or reward points on booking flight tickets or hotels etc.
- Selection of Loan in case of emergency: You can apply for credit card loan during any kind of emergency.
- Online Shopping: You can do online shopping to get more reward points. In fact, you get 2 times more reward points for online shopping.
- EMI Option: If you buy any item through credit card, you have the option of EMI to pay the bill for the said item. By doing this it may become easier for you to pay the bill.
- Benefit of Grace Period: You can avail the benefit of grace period if you are unable to pay the credit card bill within a certain period. In fact, you are given additional relaxation of 15 to 20 days in the grace period. “What is Credit Card? How to Use Credit Card? Types of Credit Card in India”
What is the difference between Credit Card and Debit Card
Actually, there are some similarities between credit card and debit card. Both these cards have a 16 digit number and also other details like expiry date and identification number (PIN/CVV).
You can use debit card and credit card to withdraw cash from ATM and do cashless transactions, whether the transaction is online or offline. But it is also important to understand the difference between debit card and credit card. Let us know what is the difference between credit card and debit card?
If we talk about credit card, then in this you borrow money from any bank or financial institution. A pre-approved limit is set for the amount of money taken under the credit card.
But debit card is issued by the bank from your savings or current account. In this, the money used by you is deducted from the amount deposited in your account.
Apart from this, if you do not return the money used within the credit card limit within the stipulated period, you will also have to pay interest. But in debit card, no interest amount has to be paid to the bank or financial institution because this money is only deposited in your account.
Apart from this, there is also the option of EMI on purchasing any item through credit card. “What is Credit Card? How to Use Credit Card? Types of Credit Card in India”
Credit Card Benefits
Using credit card is really beneficial for you. Instead of carrying cash anywhere, you can make bill payments and transactions through credit cards. Apart from this, credit cards also have many benefits like reward points, cashback, discounts and other offers which provide different saving benefits for you.
However, the benefits of credit card also depend on your wise use. So let us know in detail about the different types of benefits of credit cards.
- Cashless Payment: Using credit card you can do cashless transactions anywhere. This is a good idea to eliminate the hassle of carrying cash and is also a good idea for security.
- EMI: You can also avail EMI on anything purchased using credit card.
- Reward Points: Reward points are given to customers as gifts for making credit card purchases. Under this reward point, you can avail the benefit of cashback or buy any other item.
- Bank Welcome Benefit: The customer also gets welcome benefit from the bank on the credit card. These benefits include free cinema hall tickets, discounts, vouchers, reward points etc.
- Easy Payment: You are also given a reasonable time period to pay the shopping bill by credit card. The payment made by you within the stipulated time period is completely interest free.
- Helpful in emergency: In case of any trouble or emergency, you can get instant cash from ATM by using credit card.
Disadvantages of Credit Card
Friends, you have already got complete information about the benefits of credit card. But if you are willing to take a credit card, then you must know about its disadvantages also. Following are the disadvantages of having a credit card:
- To get a credit card, it is necessary for the customer to first improve his credit record. In such a situation, getting a credit card can be a bit difficult for every person.
- Apart from this, a separate fee has to be paid for withdrawing ATM cash through credit card.
- If any customer is unable to pay the credit bill within the stipulated time period, then he has to pay a separate interest amount or penalty.
- Also, if payment is not made on time, it also has an adverse effect on the CIBIL score. Often due to bad CIBIL score the customer has to face problems in future.
- If you take a credit card without any special need. So this can also cause you to incur additional debt. “What is Credit Card? How to Use Credit Card? Types of Credit Card in India”
Credit Card Terms and Conditions
- Secret information of credit card: No customer should share information about credit card number, PIN, OTP, expiry date and CVV number etc. with any unknown person.
- Payment of outstanding amount: In most cases, a time period of 50 to 60 days is given to pay the credit card bill. If you do not pay the credit card dues by this due date, you will also be charged interest charges.
- Online Shopping: Many times there is an option to store your credit card details during online shopping. In such a situation, you should create a strong password for security so that no fraud of any kind can happen to you.
- Cash Withdrawal: As far as possible, avoid availing the benefit of cash withdrawal from credit card because you have to pay a separate fee for this.
- Credit Card Limit: When you purchase a credit card, you are given a credit card limit. Before using this credit card, you must check your repayment capacity so that you can avoid excessive burden.
- Add on Card: Most banks also offer add on cards along with credit cards. Actually any member of the family can use this card. But the responsibility of paying the credit card bill remains with the primary card holder.
- EMI and Annual Fee: There is also the option of EMI on credit cards. Apart from this, many companies also charge annual fees or membership fees under the annual fee. However, some credit cards are completely charge free.
What is the time period for paying Credit Card Bill? (What is the Credit Card Payment Time Limit)
You already know that credit card provides cashless facility for purchasing any item. You also know that there is a time period to repay the money spent on any item using a credit card.
In such a situation, for your information, let us tell you that most of the banks give minimum 30 days to maximum 60 days time to pay the credit card bill.
If you are unable to pay the credit card bill within this specified time period, a fixed interest rate starts accruing on your outstanding amount. “What is Credit Card? How to Use Credit Card? Types of Credit Card in India”
How to get loan from credit card? (How to get a Credit Card Loan)
However, credit cards are given with a pre-approved credit limit for a maximum period of 1 month only. But if you are in dire need of money. So in such a situation, loan is also given by the bank on credit card. For credit card loan, the first thing the bank does is check your previous payments.
If your previous loan was paid on time. Besides, your credit score is also found to be correct. So you are given credit card loan immediately. A fixed interest rate is also charged by the bank on this credit card loan. Most banks charge 10% to 12% interest rate on credit card loans.
Benefits of Credit Card Loan
- Most credit card loans are pre-approved and unsecured. For this you do not require any kind of documents or collateral.
- You can convert your purchase into monthly installments on credit card loan.
- Most credit card loans do not require any guarantee or post dated cheque.
- Paying credit card loan is also easy.
Conclusion: (What is Credit Card and its Benefits)
Friends! In today’s important article, we have provided you complete information about Credit Card Details such as – What is Credit Card, How to use Credit Card, What is the difference between Credit Card and Debit Card, Benefits of Credit Card, Disadvantages of Credit Card, Eligibility for Credit Card, Documents to apply Credit Card, How many types of Credit Cards are there, Terms and Conditions of Credit Card, Which is the best Credit Card, What is the time period for paying Credit Card Bill, How to get loan from Credit Card, Benefits of Credit Card Loan etc.
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So that correct and accurate information related to credit card usage can reach every person. However, we have taken utmost care in writing this article. If any spelling or data related error is found, please forgive us.
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