credit card
Credit Cards are financial instruments that allow individuals to borrow money from banks, financial service providers to make purchase as individual for online or physical purshases.
Credit cards do have many of benifits like Line of Credit issued by financial providers, grace period to utilize the credit limit, rewards on spending, Lounge benifits, many cashback benifits and No Cost EMIs option.

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How Credit Cards Differ from Debit Cards ?

Credit Cards : Credit Cards are like that a credit limit issued by the Banks (Government Banks or Private Banks) or Financial Institute. In credit cards the money is deducted directly from your credit limit not in saving accounts. 

In credit cards, we do have a grace period to repay the amount (average grace period is 45 days.) If we do not pay the used or borrowed amount to the issuer then we have to pay a heavy penalty or late fee to the issuer. Usually  credit cards issuer charge 30% to 40% as interest charges on monthly basis. 

Debit Cards: Debit card is directly linked with your saving account. Whenever swipe the debit card, the amount is directly deducted from the account. In the dabit card case we do not have to pay any type of late fee, although few of banks are providing the overspent facility. Rewards points are lesser then credit cards. 

Types of Credit Cards ?

As per the RBI Statement there were over 8.6 crore (86 million) credit cards in circulation in April, 2023, up by 15% from 7.5 crore in April, 2022. Regular users of credit cards reached 87.4 million in May, which is all time high.

Many type of credit cards are:

  1. Basic Credit Cards: Basic Credit Cards are provide on the basis of Income from Salary or Income Tax Return Files. Usually a low credit line assign by the Banks. User can use this limit for the small transaction as online or physical. 
  2. Cashback Credit Cards : Cashback Credit Cards are those Credit Cards where users get a cashback on the spending. This cashback is adjust on their monthly billing cycle. It depends on the bank that how much % of cashback will give to the users. 
  3. Rewards Credit Cards: In this credit card option, user will get reward point on every spending like 4 reward point on every 100 INR transaction. These reward points can be used for the shopping, can be converted into Amazon gift cards, into cash, can book the flight or train tickets, can book movie tickets. 
  4. Business/Corporate Credit Cards: Business or Corporates Credit Cards are more useful to those employees who travel more. So these type of credit cards are offer to those companies. For Companies its easy to maintain the expenditure of the employees and also earn the loyalty points. 
  5. Premium Credit Cards: As name suggest these credit cards offer to only premium customers who maintain a good financial record in the bank. In this case premium reward points like VIP Airport Lounge, Golf Club Membership are offered. 
  6. Secure Credit Cards: Secured Credit Cards are offer on the Bank Fixed Deposit. In this case user will get the loyalty points which can be used for the flight bookings, 5 star restaurant benefits and other premium segments of rewards. 
  7. Travel Credit Card: This Credit Card offer is mainly useful who travelled more, Banks are giving high rewards points on their hotel bookings, Flight bookings and other payments. 

Credit Cards Ke Fayde ?

Benefits of credit cards are : 

  1. Loyalty Points for Frequent usage
  2. No Cost EMI options on Online Shopping
  3. 45 Days Grace Period to utilize the credit cards limit.
  4. Rewards point on the spending
  5. Fuel Surcharge Wavier
  6. Emergency Fund
  7. Consumer Protection
  8. Credit Score Improvement
  9. Record Keeping
  10. Travel Benefits

Credit Card Ke Ghate ??

If user do not use the credit cards wisely then there losses are also there. Like 

  1. High-Interest Rates
  2. Overspending
  3. Annual Fees
  4. Credit Score Impact
  5. Minimum Due Amount

Select a Right Credit Cards

Before applying for any credit cards, always calculate the repaying capacity. Because plastic money is very danger whenever we spend overmuch compare to income. 

After the calculation, we need to identify the uses of credit cards. Credit Cards are very useful for the monthly expenditure like online shopping, fuel. utility bills payments, tracking of the expenditure but we need to pay on the last day of monthly billing cycle. 

Before selecting a credit card, we have to see that how much reward points are gaining after the expense. Many of Banks are giving rewards or cashback on the expenses of credit limit. 

So before applying any of credit cards, always check the repaying capacity, higher number of rewards and useability of credit cards. 

Conclusion

It’s important to use credit cards responsibly, pay your balance in full each month, and avoid carrying a high balance to minimize these disadvantages and ensure that credit cards work to your financial advantage.

It’s important to note that while credit cards offer numerous benefits, they can also lead to debt and financial problems if used irresponsibly. To make the most of these benefits and avoid potential downsides, it’s crucial to use credit cards wisely by paying your balance in full and on time, and not carrying a high balance from one month to the next.

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