What is credit card? - Pros and cons

Introduction:

In today's session, we are learning about credit cards, including the pros and cons. As it is known, in every country almost 90% population own a credit card from different banks. As of today's topic, we will go in-depth into credit cards and provide you with the best information you have ever known. So stay tuned to our journey in the Depths of credit cards.

Credit card meaning:

It refers to the credit facility 'provided by the bank that allows customers to borrow money within a prior approval of credit limit'. Using credit cards, customers can make transactions on goods and services as their other mode of payment. The job of credit card issuers is to determine the credit card limit based on their income and credit score. 

Important note:- current credit score can be checked by a free credit score checker tool.

Credit card information includes the cardholder's name, credit card number, signature, CVC code, expiration date, etc. Important point:- credit cards are not linked to bank accounts. When the customer swipes the credit card, the amount is deducted from the credit card limit only. Credit cards can be used for paying to various industries including food, clothes, medical, travelling, emergency services, etc. 

Eligibility criteria:

To apply for credit cards you have to pass the eligibility which includes some conditions that have to be followed:-

• You must be an Indian citizen.
• Your minimum age should be 18 years.
• You can be either a salary professional or self-employed.
• You must have a fixed source of income (specific from bank to bank).
• Your credit score should be 700 or more.

When the customer applies for a credit card, a particular bank or financial institution goes through your financial background and checks your credit history. After checking all the things, if the customer is eligible then he will get the credit card and if not then he will not get the credit card. These cards are termed as pre-approved credit cards.

As we head toward the future there are some websites that will help you to check the eligibility criteria for credit cards in just a few minutes.

Documents required:

After passing the eligibility criteria, a bank or financial institution will call you to bring the following documents listed here:-

Advantages of Credit card:

Confused about applying for a credit card? Here we will be talking about some reasons why you should definitely go ahead:

• It helps in Building a good credit history for yourself and increases your buying power.

• Credit card offers great flexibility in the Payment process.

• By having a good financial history, it will improve your credit score. With a better credit score, you will be eligible for other financial benefits including loans and mortgages.

• After making payments from a credit card, points are given on every payment. And these points can be redeemed by making payments to travelling and e-commerce platforms.

• As compared to other sources of transaction, credit cards are considered more secure in making payments.

• Credit card payments can be done in the form of EMI payments where payments are made in instalments.

Features of Credit card:

Here we will discuss some of the important features of credit cards that you must be aware of:

• When a credit card is given to the customer, it comes with a credit limit. This limit means that users can spend money using this card.

• It is important for the holder to pay the money to the bank on the due date, which is usually after 30 days of purchasing the credit card.

• Also, the credit card limit is decided by the bank. By checking your credit score and credit history, the limit is set based on this.

• Credit cards look like thin, rectangular, plastic, or metal cards that are used to make payments.

• Each card has time period, which informs the holder to repay the credit that they have taken from the bank. Along with time period, you will get 15-20 days to receive your statement and the due date for payment of the credit card limit. With this extra time, you will get 45-50 days to pay the credit card limit.

Disadvantages of Credit card:

But it doesn't mean credit cards do not have bad effects. So before applying for a credit card, you must think twice. Here are some reasons:

• Credit card condition states that while paying the amount spent you must also pay interest amount.

• If you fail to pay the credit card bill you have to bear fees with high credit card interest: which will make you fall under the debts.

• Credit score can be dropped if the cardholder doesn't pay credit card bill on time.

Conclusion:

During the session, we learned about how credit cards provide many benefits while paying to various sectors. But it doesn't mean we cannot ignore its disadvantages. Digitally infos provides you accurate information so that you are well aware of all the happening. So stay tuned with us for our next blog.