What is a credit card? A credit card is a plastic card given by a financial organization which lets the holder borrow money from them according to previously stipulated terms like a spending limit. Most people nowadays prefer using credit cards for transactions as you can spend money up to the limit provided without having to pay any money upfront. When you make a purchase, you are required to swipe the card on a card reader for it to register your details. You can use this card for online transactions as well. You usually get around 45 days to pay the bill from the time you make the transaction but this period varies from bank to bank. You can either choose to pay the bill in full or the minimum amount. If you pay the minimum amount, then interest will be charged by the bank as per the pre-agreed rates. Applying for a card If you want a specific credit card, you can put in an application to the issuing bank. Before doing this, it is advisable to research the pros and cons of the card thoroughly. If you already have an account with a bank, it is easier to get a card. You may need a credit score of more than 300 to be eligible for a credit card and your previous payment history will also be considered. You will also need to submit details like your employment and proof of salary before you can be issued a card. Types of credit cards
- Rewards credit card: It is a card that offers reward points or cash back whenever you use the cards to make a purchase. You can also get air miles or flight points that you can redeem when you next book a ticket.
- Low-interest card: This card offers a low-interest rate and is useful if you carry a card balance. It can also be used to pay off pending debts from other cards where interest rates are high.
- Secured credit cards: These cards require a security deposit. They are meant especially for college students and individuals with a poor credit history. Once you establish your credit-worthiness, your deposit will be refunded.
Payment protection Years ago, people were scared to use credit cards because of the fear of fraud. They feared that if someone stole their card or its data and made purchases, they would have to foot the bill. But times have changed and due to payment protection being available on credit cards, card transactions are safe. If your card is stolen or has any fraudulent transactions, you can report it and get it blocked. You need not pay for the fraudulent transactions. Compare before signing up Compare what different credit cards are offering before you sign up. Check the interest rates, spending limit, fees, and other charges. Also, do check on the rewards scheme offered before you take the card.
