Q1. What is a credit card?
Ans. Credit Card allows you to purchase a product or service on credit with charges applicable in the form of interest rate.
Q2. Is the interest rate applicable right from the day of purchase?
Ans. Usually, first 30 to 50 days calculated from the day of billing/purchase are interest-free. Thereafter, interest rate will be levied by the bank on the balance outstanding.
Q3. What is the benefit of using a credit card?
Ans. With the help of credit cards, you can purchase goods and services without needing hard cash. Interest is charged by the banks for any outstanding balance only after a specific period of time.
Q4. What is a debit card?
Ans. Debit card is just like an ATM card, allowing you to purchase only if there is a balance in your account. Whenever you make any transaction with Debit Card, your bank balance is instantly reduced.
Q5. For how long a credit card remains valid?
Ans. Once issued, a credit card remains valid for one to five years, depending upon the policy of the issuing bank.
Q6. What is the process of getting a credit card?
Ans. First, select a credit card company you want to get associated with. Fill the application form and provide all the requisite documents. After processing your credit card application and verifying your particulars, you would be assigned a credit limit. Usually, it takes 3 weeks to receive your credit card.
Q7. What is a Global card and how it benefits the user?
Ans. Global credit cards are useful for frequent overseas travellers. You can use these cards abroad to pay for the transactions done there.
Q8. What is co-branded card? How it helps the user?
Ans. When a card is sold by the bank in partnership with some commercial partner, it is a co-branded card. Consumers derive many benefits out of this partnership as they get lots of free offers, prizes, discounts, etc., on the co-branded products.
Q9. How much interest rate is charged by the card providers?
Ans. Credit card providers charge 2 to 3% per month on the balance outstanding. It is always advisable to pay off entire debts before the due date. Keeping your credit card bills pending for long may harm your financial interests.
Q10. What are the different types of credit cards?
Ans. Banks issue credit cards with varying features and facilities. Some banks categorise their card range as Gold, Silver or Executive. The difference lies in the level of facilities attached with each category. For example, Gold Card – a premium segment credit card will offer better features and more privileges to the users than Silver Card.
Q11. What are the eligibility requirements to get a credit card?
Ans. Different banks set up their own 'minimum income' requirements for credit card applicants. The income requirement differs with the credit card chosen, ranging from Rs.60,000 to Rs.2 lakh per annum. A regular and steady income source is what the banks look for. Besides, you should be at least 21 years of age but not more than 65 years.
Q12. What are the costs involved in owning a credit card?
Ans. There are two types of fees involved - Joining fees and Annual fees. Joining fees is a one-time payment that varies between Rs.100 and Rs.1000. Annual fees is a recurring fee that is charged every year for continuing the membership on the card.
With increased competition in the credit card market, these fees have registered a significant drop in the recent times.
Q13. What happens if I fail to pay credit card bills in time?
Ans. It is advisable to pay at least minimum amount due every month because the late payment fees are significantly higher in case of minimum payments – around 15 to 30% of the minimum amount due. After paying minimum dues, you can extend the credit for further convenient time at lower rates.
Q14. Is it wise to use credit card when I have enough cash?
Ans. Well, it depends on what benefits you are looking for. With credit cards, you can delay the payments upto 50 days. You can also enjoy discounts and special offers on payments made through credit cards. Finally, you have to decide whether it is beneficial or not to shop with credit card.
Q15. What is credit card number?
Ans. It is a 16-digit number that stores information about the card issuer, the country and the credit card owner.