The rising usage of credit cards has given way to the great fear of witnessing a debt trap. How much you spend using your credit card is in your own hand. Closing your credit card isn’t the solution as the card isn’t a problem. Lack of financial awareness causes individuals to fall into debt with the usage of cards. When you avail a credit card, you must note how it works and how you can get the best out of the poor financial condition through the card. Here in this blog covered are the features linked with credit cards –
What are the credit card features you must be aware of?
Let’s understand what’s a credit card and its crucial features –
Unsecured financial instrument –
A credit card by nature is an unsecured tool that assists you make payments for transactions offline and online. Whether it is IDFC bank credit card variant i.e., IDFC FIRST select credit card or Standard Chartered credit card variant i.e., DigiSmart or any other issuer, you can use the card for paying a wide range of products as well as services. For ensuring transactional safety, credit cards provide in-hand security benefits and offer multi-factor verification. Hence, you can make offline and online payments freely using a card.
Credit card limit –
When you place an application for a credit card, then you are offered a fixed set credit card limit based on your income. This limit is the highest amount you can spend through a credit card. The credit card issuer determines your limit based on your level of income and your past financial record. You must remember that the better your score, the higher would be your limit on credit cards.
Wide range of options –
Credit cards have distinct variants. You can select the one based on your requirements for availing a card. A few available card options are –
Travel credit card – Provides reward points on expenditures on travel booking and others.
Shopping credit card – Offers benefits on offline and online transactions.
Fuel credit card – Saves considerable expenses on fuel surcharge.
Student credit card – Such credit cards have low credit card limits and are an excellent tool to learn about financial management.
Secured card – Allows you to use fixed deposits to avail a credit card against it.
Cashback card – Such credit cards provide cashback of a specific amount on expenses using the card.
Grace period – A credit card’s grace period is the time period by which you must repay the outstanding amount without incurring any interest rate. If you make credit card due repayment by the grace period, then you would not get levied any interest constituent on the outstanding bill amount. But if you delay the repayment of the amount, you will require bearing high-interest fees. You must ensure to receive a free interest period of nearly 40 to 45 days to make the repayment of the outstanding amount.
Expenses on the card –
As you avail a credit card, you may have to levy a few expenditures on your credit card. Such expenses involve an annual charge on a credit card, interest constituent on delayed credit outstanding, foreign transaction charge, cash advance charge, etc. You must note that all financial institutions levy such expenses; however, you should check each one of them before placing an application for a credit card.
Global Acceptance –
Credit cards are a crucial financial instrument that is worldwide accepted without any add-on international charge. This makes it simpler for the card user to make the buys from anywhere and still benefit from expenditures performed.
Balance transfer –
Repaying the outstanding credit card due through another credit card is known as a balance transfer option. It means if you move the outstanding balance of single or multiple cards to another card, you are basically transferring the outstanding balance from one credit card to another credit card. Now, as the balance is transferred, interest levied on the balance is subject to the new card rates. In a few cases, you might receive a zero per cent introductory interest transfer; however, in a few other cases, you might even be levied a charge for transferring the outstanding balance.
Benefits of credit cards –
Considering the rising credit card demand worldwide, it is crucial that the benefits of holding a card outweigh the negatives. Read on to know the reasons why you should open a credit card.
Simple repayment facility –
One of the crucial features of a credit card is it permits you to pay the borrowed amount easily. You can use the netbanking, UPI or NEFT facility to repay your outstanding debts on time.
One card for all purposes –
A credit card allows you to transact for all your needs and requirements. For example, in the case, you are a shopaholic, then you may be on a constant lookout for cashback and discounts on shopping. Here, in this case, opting for a shopping credit card is the best option for you. Likewise, if you require travelling a lot from your own vehicle, then you may use a fuel card for a waiver on a surcharge on fuel expenses. In contrast, in case you are a businessman or traveller, then a travel card or business card may be the correct option for you.
Earn points and rewards –
Transactions through credit cards would assist you to earn higher rewards which you can use in your next purchase. Every purchase endows you with distinct cashback, discounts, or rewards that you can liquidate later. It can assist you to save on huge amounts over the long term.
Simple approvals –
The credit card application procedure is a simple task. With the rising demand and popularity, credit card approvals are hassle-free in nature. You can apply easily for a card and get approval for the same through the offline or online route. All you require doing is fill out the application form and submit a few crucial documents for the card as authentication proof of residence, income, and identity.