Faq’s On Credit Card

What is a credit card?

A plastic card that looks very similar to a debit card and allows people to buy products and services on a credit. A credit card can be procured from a bank or financial institution that loans the amount to the credit card holder to help him/her achieve their personal financial goals. A credit card has a credit cycle that a cardholder must follow to pay the bank back. If the cardholder cannot pay the balance by the due date, there is an interest that is levied on the balance. If the cardholder manages to pay the entire amount within the due date, the interest in not charged to the cardholder. In case of late payment, the bank charges a late payment charge to the cardholder.

What is the difference between a credit card and a debit card?

Though the credit and a debit card look alike, there is a whole sea of difference between them. While using a debit card you are paying up from your own account. In case of a credit card, you are not using the funds of your account but borrowing from the bank. When purchases are made using a debit card, the expense is debited from your personal account. When a credit card is used, the amount is treated as a loan in your account. When you draw money from an ATM using your debit card, no charge is levied against you, while money drawn using a credit card attracts a charge.

Why should I get a credit card?

Your financial goals determine whether you need a credit card or not. There are various reasons why you will need a credit card. The most important reason that many individuals opt for a credit card is that they are entitled to rewards and cashback on purchase. Another reason is that you can buy now and pay later when you have a credit card. This ensures you have an alternative to cash with no immediate pressure on your financial health. Having a good credit score ensures you are eligible for a loan later with the bank.

What is the interest rate on a credit card?

Every credit card comes with an interest rate on the credit line. Interest is applied per month. Avoiding paying the interest is possible when you pay the entire balance before the due date. If the amount is not paid entirely within the due date, then that amount is carried forward to the next month and monthly interest is added to it. To avoid lay payment charges, it is important that you pay the minimum due amount. After paying the minimum due amount, the balance is taken forward to the next month and interest is added on the amount taken forward. The interest is usually between 3% and 4% per month.

What is the credit limit of my credit card?

The upper expense limit that you can make on your credit card is the credit limit of your card. Every card comes with a different credit limit. Get in touch with your customer support agent to know the upper limit of your credit card. It is also possible to find your credit limit by logging on to your credit card account online.

Can I extend my credit limit?

It is possible to extend your credit limit. Extending your credit limit is completely dependent on how regular your payments are. If you make regular payments with the bank, then the bank will allow you to increase your credit limit. If you are not regular with your payments then the bank will ensure that there is a reduction in your credit limit and this also will affect your credit score.

Am I eligible for a credit card?

If you are a salaried or a self-employed individual who is between the age of 18 and 60 years, then you are eligible for a credit card. It is also necessary that you must also have an annual income of at least Rs 2 lakh. Each bank will differ in their eligibility criteria When comparing the credit cards of your choice, it is also necessary to check the eligibility criteria for the card. If you are not eligible for certain cards there are some you may be eligible for.

How do I pay my credit card bill?

Paying your credit card bill is as easy as it can get. Log in to your credit card account online and make the payment using net banking, mobile banking or NEFT to pay the bill from any of your savings or recurring deposit accounts. All it takes is a few minutes to credit the amount into your credit card account. It is also possible to make payments using cheques. However online payment is faster, easier and simpler. There is also an option to make a cash payment at your nearest branch. There is a small charge when payment is made using cash.

How do I find out my credit card bill?

Every month you will receive a credit card bill via mail and email. At the end of every credit cycle, a detailed statement of your account is sent to you. This statement also displays the purchases made during the cycle, balance you owe to the bank and minimum amount due along with the summary of your account.

What is my credit score?

This score is a three-digit score that displays the capacity of the cardholder and his/her ability to replace the loan. The score is calculated on how regularly the individual made the repayments. This score is generally a benchmark for banks and financial institutions to determine whether the person is capable of a loan. Therefore it is vital to maintain a good credit score. Using a credit card improves your credit score. The factors that determine a credit score are the amount paid every month, the frequency of payment, and the number of times timely payment is done.

Can I withdraw cash with my credit card?

It is possible to withdraw cash using your credit card. The card can be swiped at an ATM for withdrawal. It is vital to know that drawing cash invites additional charge to your balance.