FAQs: All you want to know about credit cards

Srishti P
·3-min read

A credit card is a device that allows you to borrow funds for a limited time, based on a pre-approved limit set by the card issuer, to help you pay for purchases. It is just a thin rectangular plastic card issued by banks or financial institutions, which also decide the limit on how much you can spend based on your credit score.

High credit score and better repayment history lets you enjoy a higher spending limit.

How does a credit card differ from a debit card?

Well, when you swipe your debit card, money that is spent gets immediately deducted from your bank account.

However, in case of a credit card, the money is paid by your card issuer, if it is within your pre-approved limit, and you get some time to pay the credit card bill.

You also have the facility of paying bank only a part of the spent amount, although you have to pay a high interest rate on these borrowed funds. So it is best to clear your credit card bill in full to avoid paying exorbitant additional charges.

Responsible use of your credit card helps to build your credit history. Debit cards generally can’t.

How can I receive a credit card without a credit track?

For someone with a small credit background, there are several possibilities in the marketplace. Shop to find the lowest APR card and fees that you can claim.

If you have difficulties getting cards authorised, suggest a secure credit card requiring a security deposit or ask the parent to add you to their card as a specific user.

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What are the benefits and features of a credit card?

When the card is issued, several banks give a complimentary present to new credit card applicants in the form of incentive loyalty points, coupons, discounts, etc. They usually have a loyalty scheme that encourages cardholders to receive reward points for each purchase they use their cards to make.

What is the eligibility to get a credit card?

The eligibility criteria of a credit card:

  • You must be at least 18 years of age. Some banks have a minimum age of 21 years, though. The maximum limit for age also varies, and usually goes up to 60 years.

  • Your annual pay decides if a specific card is available for you. In India, the minimum wage required to qualify for a credit card is about Rs. 3 lakh p.a. But, since this condition varies based on the card issuer you chose, it is wise to verify this criterion with your bank.

  • Submissions may be made by natives, tenants, and non-residents. There are, however, a few cards that are only open to Indian residents.

When would my credit limit be determined by the card issuer?

In its own decision, the prospect card issuer may decide the limits and cash withdrawal limits of the cardmembers. Customer profile, redemption ability and CIBIL credit report, along with other internal subscription requirements, are some primary considerations that may impact the card issuer’s decision.

When I postpone my repayments, how are the penalties levied?

The minimum balance owed on outstanding products should be charged per month at least. This is because late payment costs are very high—about 15% or 2.5% of the gross amount left. After the designated “interest-free period,” late payments are chargeable.