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Credit Card also is known as plastic credit is issued by the bank or other financial institution that gives an authority to the borrower to borrow funds at the point of sale. Credit Cards are the convenient substitute for cash and primarily used for short-term financing. A credit card is issued based on the eligibility factors that include monthly income, credit history, CIBIL Score, company category and other related factors. The lending financial institution draws a credit limit for each borrower based on his/ her credit profile. Usually, the borrower has to pay back the credit to the bank within the 45 days of the purchase. In case, he fails to pay back the amount or delays it the bank charges interest as a penalty.
Eligibility Criteria for Applying For a Credit Card
There are certain factors that are important before applying for the credit card. Refer to the following table to know the eligibility for Credit Cards:
|Eligibility Criteria||Salaried Employees||Self-Employed|
|Age||21 years and above|
|Monthly Income/ ITR||Minimum Rs. 20,000 p.m., however, income criteria varies from bank to bank|
|CIBIL Score/ Credit History|| |
Features and Benefits of Credit Card
There are several benefits of having a credit card. The following benefits are:
- Substitute of Cash: Credit Card is a substitute for cash. A credit card user can simply pay for his purchases via credit card.
- Joining Fee: Several financial institutions take some amount as joining fee from the borrowers. However, some institutions also offer Credit Card at NIL joining fees.
- Repayment of the Credit: The borrower has to repay the amount to the bank for the purchases made within a stipulated time. In case he fails to do the same the bank charges a fixed rate of interest as a penalty for late payment of the bill. Typically the period ranges from 30 to 50 days.
- Convenience: Credit Card provides convenience to the borrower as he can make purchases easily anywhere and anytime. Moreover, the payment can be made in domestic as well as in foreign currency.
- Additional Benefits: Apart from the convenience, Credit Cards are beneficial in other ways. The credit card users can earn reward points, enjoy discounts and cash backs on the purchases made.
- Helps in building Credit rating: The credit card details and the repayment history can help the borrower in building a good credit rating. The sound repayment track of credit card bill dues affects the CIBIL Score of the borrower.
- Helpful in Emergencies: Credit Card could be helpful in case of emergencies. For example- an urgent requirement of cash for a medical emergency can be fulfilled by credit card easily.
- Security: One of the great features of Credit Card is the use of chip and pin system that secures the transactions from any kind of theft.
- Amount of Penalty: In case the user fails to pay back the amount or delays it then the bank charges a percentage of the bill dues as a penalty. Typically the penalty ranges from 36% to 42%.
How is Credit card used?
Whenever a purchase is made with the Credit Card, the user just has to swipe his card at the point of sale. The system authenticates the identity of the user with the associated vendors and generates the receipt for both buyer and the seller. After the purchases for the current month is made, the bank sends a monthly bill that is required to be paid before the due date. If in case the user fails to pay the bill before the due date the bank charges a penalty for the same in the form of interest that varies from the bank to bank.
A credit card is also used for the online transactions. The user has to fill in the card details including the card number and CVV code for authentication. The payment is made once the authentication is done.
How can I select the right Credit Card?
Credit cards are issued by several banks and other lending institutions packed with different benefits. However, the user has to select the card that is suitable to his needs. The banks are offering credit cards based on the usage of the customers. The borrower can consider the following points to decide the most suitable card:
- Reward Card: Reward Card enables the user to earn redeemable reward points. The user can earn points on every purchase and enjoy various offers.
- Indian oil Card: There are users who travel a lot and their consumption of petrol is more. To help and facilitate such users, the financial institutions have designed this card type. The users can pay for oil with this card and receive several discounting offers.
- Shopping Card: This card type is specifically designed for the users who enjoy shopping. By using this type of credit card they can get various discounts and offers.
- Cashback Credit Card: This type of card helps the users in getting some part of their purchase back into their bank account.
- Airlines Credit Card: There are users who travel via flights. This card type is suitable for such users. With the help of using this card, the users can get cash back, discounts and redeemable reward points.
Some of the examples were discussed. After meeting the eligibility criteria the user can pick the credit card based on his usability.
How mymoneymantra can help the user in getting the best Credit Card?
Mymoneymantra is a leading financial services marketplace with an experience of more than three decades. The mymoneymantra team consists of experienced and service-oriented professionals who will help you choose the best gold loan offer, suitable to meet your specific requirement. They will keenly analyze your financial needs, and then help you throughout the process beginning from the submission of Credit Card application till the card issuance and even afterwards for any service requirement.
You can get in touch with our loan experts anytime and obtain the best loan offers.