what is a credit card?
Credit card is typically a plastic card, that grants you access to credit amount that you can use to make payments and avail services. this amount has a repayment time within which the amount is to be paid off. the upside of these cards is that they offer rewards in the form of cashbacks or points. a credit card is issued by a bank or any type of credit lender
how does a credit card work?
Credit card works like a loan, but instead of receiving money beforehand, you get a set credit limit on the card. the issuing authority sets a credit limit on the amount that can be spent before you have to pay back a specified amount to the lender at the end of the month.
credit cards come with certain benefits.
●You can use a credit card to make a large purchase which can be repaid in smaller installments over a period of time
●Credit card is relatively safer to carry as against cash and is accepted mostly everywhere
●Using a credit card can help you build a good credit score.
●If you have a good credit score, you can avail additional cash backs, lower interest rates, and many more exciting offers.
Above are the benefits also you want to check below points while using Credit card.
●If you dont knowhow to spen money, you might accrue a large sum of debt which may be difficult to pay back
●you may give in to impulsive purchases knowing that you always have money to spend
●Fail to repay monthly dues, not only would you not receive any benefits, but this could affect your Cibil score and dont get any benefits.
●Monthly interest over a long time, may sum up to a large amount of debt.
How do i choose a good credit card ?
Firstly know your requirements and there is different types of cards.
1)credit builder cards
If you want to increase your credit score then choose this card. it allows them to build a credit report in case you have a poor borrowing history. the interest rates are high, so make sure to use them wisely and repay every month. this will build a steady reputation with the lender.
2)balance transfer credit cards
Balance transfer credit cards allow you to move existing debt to a new credit card offering a lower interest rate. this means you can pay the debt which was built on the other credit card, with a lower interest rate.
3)Overseas credit cards
overseas credit card allows you to make a payment abroad without any international fee. this eliminates the need for holding cash when you’re on an international holiday, thus making your trip stress-free.
4)Purchase cards
This credit card for purchase credit cards offer a 0% interest when you use them for any kind of purchase.
how to use my credit card?
Credit card is as simple as a debit card – tap, swipe, pay and you’re good to go. but the rules here differ. Many things you should know while handing these cards.
1)Be cautious about the credit utilisation ratio
2)Make repayments on time
3)Pay more than the repayment amount
4)Avoid using a credit card to withdraw cash
Charges of using a credit card?
1)interest rates
Interest rate is essentially an amount charged by a lender for borrowing money from a credit issuing authority. you can avoid paying the interest if you repay the entire balance every month, or if you make repayments in advance for the months ahead.
2)Annual fees
an annual fee is a fee you pay every year for the privilege of carrying a credit card. whether an annual fee is worth paying or not, you can decide that by calculating your spending against the rewards you will receive by the end of the year.
3)late payment fees
Late payment fees are charged when you don’t make the minimum payment on the due date. to make sure that you avoid this type of payment, turn on auto-pay which will ensure that the balance is paid every month.