Credit Card is just a value added service as a banking service by Bank or NBFCs. The Credit card works on loan module. In a simple language we can say that Bank give you loan for some time without interest but after due date of payment the interest charges may be very high. Here we will discuss some details that to be known for everyone for credit card use.

What is Credit Card?

A medium to provide credit facility for an interest free credit period.

Credit card images
Credit card images

How to Get a Credit Card?

Only Banks or NBFCs can issue the credit card to customer as per the RBI guidelines and BR Act 1949.You can easily apply in any bank to get a credit card. In some Banks you have to open saving account to get the credit card facility but some provide this facility without saving account.

Limit of Credit Facility in a Credit card-

The limit of credit facility that can be availed by a credit card may depend on salary slip, ITR and your credit history. Some banks enhance the limit of credit card against the Deposit or Fixed Deposit.

Interest Rate on Credit Card Facility-

There is no interest rate on credit facility by credit card only in free credit period. The free credit period may vary from 15 Days to 51 Days bank to bank. Interest rates are applicable after due date if payment is not made on time.

Also Read: Pre Independence banking history of India

Banks ask to pay minimum amount before due date for the validity of card and to carry forward the rest bill amount. It doesn’t mean that you don’t have to pay interest on rest amount. Interest will be applicable as per terms and conditions.

Advantages of Credit Card-

  • Interest free credit period up to 51 days.
  • You can also withdraw cash from ATM through your credit card.
  • No need to carry cash. You can purchase the goods and services and pay for them up to your credit limit.
  • You can purchase many items on EMI through Credit card facility

Disadvantages of Credit Card-

  • When you purchase through credit card, you need not to worry about money. This may leads to extra shopping many times and disturbs your monthly budget.
  • Loss of credit card is the worst security threat to your money. It can be access sometime without using your PIN.

Also Read: Difference between small banks and payment banks

Our banking industry is trying to develop the Credit card customer base. So RBI is also trying to minimize the risk related to Credit card. Now RBI has issued the notice regarding EMV chip base card that is very important way to minimize the security risk. You will have to enter your PIN to complete the transaction. This definitely leads to the zero risk.

Use credit card with some precautions and shopping restrictions, you will always enjoy the facility of Credit Card.


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