What is a Credit Card?
A Credit Card is the convenient alternative of cash or check issued by banks and financial institutions, enabling the holder to make a payment (or draw advance cash) on credit. The due amount is paid as a lump sum within the due date or as monthly instalments.
You can use it to shop, dine, travel, buy tickets, and pay bills and what not. A credit card can also be used for improving your credit score. Moreover, a credit card lets you track your expenditures and manage your finances!Also, you can borrow money from bank in form of a loan using credit card whenever you are in need.
The way to go about it is simple. Stay calm and call your bank customer care center and get your card blocked before it gets into wrong hands. You should receive your new card shortly after making a request for the same (within 7 days).
The eligibility for a credit card differs from provider to provider. However the basic criteria for getting a credit card is:
- You are at least 18 years old
- You have a source of income
- You have a savings account
- You meet the minimum income bracket (differs from card to card)
If the due payment is made within the due date, no interest is charged on the card. But if the card holder makes the due payment after the due date or fails to make the minimum monthly due payment, late payment charges set in. In such a case, the card holder ends up paying not just the late payment fee but also higher interest rate. It also adversely affects his credit score.
Credit cards are not just limited to swipe-n-shop. You can also use them to borrow cash from the card provider. Credit cards comes with a Personal Identification Number (PIN) by which you can withdraw cash at ATMs and pay it back later in one go or in instalments.
The credit limit fixed on your card primarily depends on the type of card which in turn depends on your income bracket and credit score. While setting a credit limit, the banker looks out for card holders ability and willingness to repay.
Here are little things that you have to keep in mind to make sure that your card will not be misused.When you withdraw the money from the ATM, never ever leave your receipt. Make sure to shred the receipt before you throw it in bin. The reason being that fraudsters know well how to make use of your discarded receipt to dig out your account number.
Never give your credit card number on the phone especially when the other party calls. Every time you make a purchase, always double check whether or not you have got the card back. Forgetting credit card numbers and respective PIN can be a real pebble in the shoe at times. You should note down the details of your cards in a secret diary to have a back-up in case it slips your mind.
Always keep a track of your monthly statements. Sometimes, you might discover transactions that you never made.
The due payment on your card can be made in more than one ways.Pay in person at one of the card provider branches. The most conventional and straight mode of making the credit card payment is a cheque. All you need to do is drop a cheque in favour of the credit card provider.Payment can also be made conveniently via tele banking and internet banking facilities.Due payments can also be made via automated banking wherein you authorize your bank to pay your outstanding bills and due payments on your behalf. This way you get free of remembering due dates.
A true foodie longs for tasting diverse cuisines around the world. For such passionate people, there are specialized credit cards better known as diners card or dining card. These cards are a great way to save money. All you need to do is get your dining card swiped for all your dining expenses. The more you expend via your card, the more reward points you get to earn. Many high end restaurants, food chains and eateries provide additional discounts to dining card holders.
What are the charges involved?
- Joining fee paid at the time of purchasing a credit card.
- Annual fee – pre- specified amount paid annually by people having credit card.
- Duplicate statement fee – a fixed sum charged on getting a duplicate statement in physical form.
- Late payment charge it is a penalty to be paid over and above the interest charges, if the payments are not made timely.
- Cash withdrawal – an interest is charged on withdrawal of cash against the credit card.
- Service Tax – service tax is charged on the expenses made using a credit card which depends on the total value of the transaction inclusive of interest, fees and other charges.
- ECS or cheque return charge – a fixed amount is to be paid in case of ECS failure or cheque bounce.
- Foreign currency transactions – for the transactions made on the foreign land, a defined percentage of transaction value subjected to a minimum amount is to be paid to the credit card issuer.
- Over-limit fee – It is the fee charged when your purchases, finance charges or fees exceed your credit limit.