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A Credit Card is a facility offered by banks and financial institutions allowing you to make online as well as physical purchases without needing to exchange hard currency. A credit card is a thin rectangular piece of plastic or metal issued by a bank or financial services company, that allows cardholders to borrow funds with which to pay for goods and services with merchants that accept cards for payment. Credit cards impose the condition that cardholders pay back the borrowed money, plus any applicable interest, as well as any additional agreed-upon charges, either in full by the billing date or over time.

Credit Cards work on the ‘Buy now and Pay later’ principle. It is a straightforward process. Every Credit Card comes with a prescribed limit. If the threshold is available at the time of your purchase, the bank approves the payment. The bank raises the bill on the fixed date. You have to make the payment on or before the due date mentioned in the statement.

Credit Cards are the perfect alternative to cash. There is no need of carrying large amounts of money when you have a Credit Card. You get an interest-free window depending on the date of billing and the due date. The maximum interest-free period is between 52 and 55 days. Credit cardholders can avail cash advance facility on an urgent basis. Every Credit Card comes with a cash advance limit. Note that this is not an interest-free advance. You have to pay interest on the cash advance portion from day 1. You can own a Credit Card and enjoy various benefits that come with it such as bonus points, gift vouchers, rewards programs, cashback benefits, and multiple other benefits. Banks allow credit cardholders to apply for add-on cards for their family members. They can use these cards on an individual basis. Banks issue unique Credit Cards that allow the cardholders to avail travel benefits like air miles, airport lounge access, airline offers, hotel offers, and travel insurance. These cards are also known as Co-branded Credit Cards. Some Credit Cards come with lifestyle benefits like dining, shopping, entertainment, and wellness and so forth. Many banks offer fuel surcharge waivers to their credit cardholders. Proper usage of the Credit Card can improve your credit history. Today, you have international Credit Cards that allow you to make payments in foreign currency. You can also withdraw cash in foreign currency when you travel abroad. There are Credit Cards that come with general insurance coverage. Some cards come with lost card liability or insurance to protect the cardholders from missing cards and forged transactions.

Age of the applicant – The minimum age for applying for a credit card is 21 years Monthly Income – Banks have different criteria as far as monthly income is concerned. However, the minimum monthly income should be around 20,000. Credit History – A score of 700 and above is considered acceptable for issuance of a Credit Card. Your credit report will show the details of your credit history.

1. Credit Card Numbers Every Credit Card number has 16 digits The first digit on the card represents the system, for example 3 for Travel or Entertainment card, 4 for Visa Card, 5 for MasterCard, and 6 for Discover card. The American Express Card starts with 37 while the Diner’s Club card begins with 38 Every card has a CVV (Card Verification Value) number written on the reverse side of the card. It is usually a 3-digit number. American Express cards have a 4-digit CVV number embossed on the face of the card. The CVV number is an anti-fraud security feature. Banks issue the PIN (Personal Identification Number) for every Credit Card. You should change the PIN after the first usage. It is a security feature. You will have to enter this number during every card transaction. Nowadays, you have a second layer of security available when you use Credit Cards online. You can set up an individual six-digit PIN to verify your transactions online. Alternatively, you can seek an OTP (One Time Password) number for every purchase you do online. Banks send this OTP to your registered mobile or email id. 2. Reward Programs Reward Points – Every transaction on your Credit Card can earn reward points. You can redeem them subsequently and enjoy attractive offers. Indian Oil Card – This card is beneficial to people who spend a lot on petrol. This card gives you the facility of paying for petrol with reward points. Shopping Cards – This is an ideal card for people who love shopping. You have access to various discounts and offers. Cashback Credit Card – This type of card entitles you to receive cashback offers on specific purchases you make. Airlines Credit Card – Frequent flyers can use this Credit Card to get attractive discounts and redeemable mileage points on individual 3. Credit Card Limits Every Credit Card has a revolving credit limit. Banks approve these limits based on your eligibility. You cannot use the card for amounts exceeding your limit. The banks review the limits at the time of renewal. Based on the usage and repayment history, banks can enhance or reduce the limit. 4. Minimum Payment Due It is an essential concept. Credit Cards allow you an interest-free period ranging from 20 days to around 52 to 55 days depending on the billing cycle. Every month the bank submits the bill for payment. You should pay the entire balance to take advantage of the interest-free period in the subsequent billing cycle. However, you can opt to make a part-payment of the bill. Every bill has a minimum payment due (usually 5% of the outstanding amount) amount. You can pay an amount equal to or more than the minimum payment due to enjoy the Credit Card limits. The difference between the bill amount and the payment you make is subject to interest in the range of 3% to 3.5% per month

Joining fee – Usually, banks do not charge any joining fee. They provide the card free for the first year. Subsequently, they charge renewal fees annually. Certain banks charge joining fees. Renewal fees – There is an annual renewal fee on the card after the first year. Interest – Every card has an interest-free period depending on the billing cycle and the due date for repayment. Usually, it is around 20 days to a maximum of 52 or 55 days. If you make the full payment on or before the due date, there is no interest. However, if you make a part-payment, the balance amount will attract interest. These rates vary from bank to bank. Usually, it is in the range of 3% to 3.5% per month. Cash withdrawal fee – You have a cash withdrawal limit on your Credit Card. This facility allows you to withdraw cash in an emergency from any compatible ATM. Banks charge a cash withdrawal fee on every withdrawal. This cash advance facility attracts interest from day 1.