A credit card is basically a plastic card that is issued by financial companies such as banks, service providers, store and other issuers. It lets you borrow money to purchase goods & services on credit. In today's times, where most people prefer digital payments, credit cards are convenient ways of buying things.
It comes with a Credit Limit, which is set by the respective financial companies. Ideally, this limit depends upon your Credit Score. The higher the score, the higher is the limit to borrow money. Just in case you don’t know what a credit score is- it is the score given to individuals, which determines their creditworthiness.
Here're some basic requirements:
When money is borrowed using a card, you need to pay back the amount within the grace period, which is usually 30 days. In case, you Fail to repay the money within the grace period, interest will start accruing on the outstanding amount. Moreover, an additional amount will be imposed as a Late Fee.
When it comes to buying a card there are a lot of options available today. But you need to choose the right card based on your personal expenses and lifestyle. Here are some of the widely used types:
This card is meant for those who have a lot of debt. A Balance Transfer card will allow you to transfer a high-interest credit card balance to the one having a low-interest rate. It gives you a period of 6-12 months to pay off the interest rates.
It allows you to pay zero interest on purchases & balance transfers for a certain time period. These come with initially low introductory APR that increases after a certain period or a single low fixed-rate annual percentage rate that doesn’t change.
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This is made for college students as they have little to no credit history. It generally comes with a small credit limit. This can be a good first option to start with.
Reward cards, as the name suggests are those that offer rewards on card purchases. Rewards can be in the form of cashback, credit points, air miles, gift certificates, etc.
An initial amount needs to be deposited as a security, which is usually equal to or greater than the credit limit of the card issued. This is a good option for those who have a Bad Credit score. With a secured card, you can build up your score and eventually move to an unsecured card.
These are the most preferred type of credit cards. An unsecured type doesn’t involve any type of security deposit. In case you fail to pay the bills, the creditor might choose other options like referring your account to a third-party debt collector, reporting the negligent behavior to the credit bureau or suing you in court.
Anyone that earns a nominal salary and has an adequate amount of work experience is eligible to apply for a silver credit card. The membership fee for these cards is quite low and no interest is charged for the initial period of six to nine months for balance transfers.
This card comes with a lot of benefits like high cash withdrawal limits, high credit limits, rewards, cashback offers and Travel Insurance. Anyone with a high salary and a good credit score can apply for this card.
These are basically a premium credit card that offers a lot of privileges and benefits to the user. They have their own rewards program that includes, reward points, Cash Back offers, air miles, gift redemption etc.
Prepaid credit cards require you to load an amount of money into the card in order to carry out transactions and enjoy the benefits. Your outstanding balance is the amount that is left in the card after making a transaction.
You can apply online as well as by directly contacting the Bank branch. Online being more easy and convenient for the hassle-free process.
Here is a list of documents that are required:
You can apply for a card online by simply heading over to the company website, choosing your desired card type and then filling up the application form with the correct information followed by the submission of necessary documents. Similarly, the offline process for applying for a credit card requires you to fill up the application form at the respective bank for the card type you choose and then submit the documents that are required along with the form.
Some of the most popular credit cards in India are:
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