Apart from the convenience of shopping, credit cards are secure payment options for cardholders. All Indian credit cards (except Amex) come with a 16-digit number on them. This number identifies your account for your bank.
Appearance
Every card comes with a unique number that has to be entered every time you make a purchase at a merchant outlet. At the bottom of the card, you will find the expiry date which is also useful when providing authenticity of your card when making an online purchase.
A credit card is very similar to a debit card in how it appears. The 16-digit credit card number is available in the front of the card along with the account holder’s name, as well as the expiry date. The back of the card features a magnetic strip that records data of all transactions made. Right below the card is the CVV number.
Safety
These days credit cards come with a magnetic EVM chip instead of the magnetic strip – this upgrade makes the card safer and convenient to use. There are some cards these days that come with the contactless mode of payment. This enables the user to place the card just on top of the point of sales machine to make the payment as against the traditional swipe.
When using a credit card, you can be assured of a two-pronged safety process. To make an online transaction, you will first need to enter the CVV code apart from the one-time password that is generated. The OTP is sent to your registered mobile number. Please always ensure that the 16-digit number and CVV are never revealed to anyone.
When making an offline transaction, at a point of sale, you will have to use your credit card just as you would use the debit card. After a swipe, enter the pin number. It is vital to punch the numbers secretly so that your pin number is not compromised.
Credit Limit
Every credit card comes with a fixed credit limit. This means that your spending amount is fixed and you cannot go beyond that with your credit card. However, the credit limit can either be revolving or constant. The normal limit is the one that the bank sets for you when issuing the credit card. When you have a revolving credit, the credit differs based on your financial exposure.
To sum it up, a credit card issues a line of credit to the account holder. This line of credit is returned by the customer either by choosing to pay a monthly installment or the customer can choose to pay it all in one go. When the cardholder pays monthly there is no interest that is charged to him. If the cardholder makes a cash withdrawal using the card, he/she is most likely to pay a higher rate of interest.
Payments & Annual Fee
The bank usually charges an annual fee for most cards. There are also plenty of credit cards that come with no annuial fee other wise called as lifetime free credit cards. Add-on cards may also come with additional charges. To build a good credit score for yourself, it is wise to improve your credit score. This score will help you get a loan later. If there is a delay in payments, you must be aware that a penalty will be imposed.
Grace period or minimum additional days are issued to the cardholder so that he/she can pay without incurring penalty charges. When the balance is carried beyond the grace period, an annual percentage rate is added.
What amounts to the total balance on your credit card is the amount of all the purchases made – the financial charges as well as the fees. When your balance is higher, you get lower credits to make further purchases.
With the help of the account statement provided for the benefit of the customers, banks and financial institutions help you track your transactions made using the credit card. This statement also helps you as a cardholder to scan for any discrepancies and frauds made using your card.
With a credit card, the user can avail benefits by making purchases under ‘buy now and pay later’ policy. This means that when you want to purchase larger commodities such as fridge, car, etc. you can use your credit card now and pay later in installments over a period of time.
Go Cashless
Another huge benefit of using a credit card is that you do not have to worry about carrying huge amounts of cash with you whenever you go out shopping. The credit card replaces your requirement for cash payment. There is a specific service tax issued by the Government of India on the cardholder if he/she uses the credit card. However, many institutions reverse this service tax when purchasing fuel.
Most cards are available to use globally, which makes it safe for you to carry as well as nullify the need for currency conversions.
Apart from providing credit, a credit card comes with various features designed to suit the needs of all kinds of people. Some benefits are in the form of cashback, others in the form of rewards, discounts, and airline miles.