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Sunday, 15 December 2019

Why Is Everyone Talking About Credit Card?

          Why Is Everyone Talking About Credit Card?

    There are so many questions that arise in our minds when we heard about Credit Card. These questions along with their satisfactory response are mentioned below.

What Is A Credit Card: 

There are so many definitions given by various people when we mentioned the Credit Card. Some say it is a complex form of many flows, some say it is a death debt, some say it is a borrowed money which was given to the borrower by bank or some credit card organizations.
credit card

Let me tell you the exact or most appropriate answer, could be given to the above question.

 Credit Card is a small plastic card, issued by the banks or Credit card organizations to the customer or credit cardholder to pay bills or expenses on the promise of repaying the debt amount of money on time to overcome from extra charges such as high-interest rates. The usual time period given to the cardholder may vary from one bank to another, but usually, it is 30-40 days.

credit card

However, if you are unable or unwilling to pay your full balance at that time, you will be bound interest on your purchases – money charged in addition to the amount you already owe. That’s one-way card issuers earn money in exchange for making these temporary loans.

Credit card interest is generally charged as a percentage of what you owe each month. The percentage of interest you’ll owe each year is your annual percentage rate, commonly referred to as your APR.

Your APR may be anywhere from 0% to 24.99% depending on your personal credit profile, credit history, or credit score. But since months aren’t all the same length, most card issuers use a daily periodic rate (DPR) to calculate interest charges. To find out your daily periodic rate, you simply divide your APR by 365, the number of days in the year.

An example: If your APR is 15%, you’ll be charged interest on your balance at a daily rate of .041%. 

Specification of Credit Card:

 The size of most of the credit cards is 80.56 mm into 53.98 mm and rounded corners with a radius of 2.88-3.48 mm, conforming to the ISO/ICR 7810 ID-1 standard as the same size as the ATM cards and other payment cards, such as Debit cards. 

What is the difference between Credit Card and Debit Card: 

.A Credit card is a postpaid card, like a postpaid mobile sim card where you have to pay the consumed amount at the end of the month when the bill is generated. On the other hand, the Debit card is a prepaid card, like a prepaid card and this card is connected with saving the account of the customer and he can make a purchase up to the limit he has in his account.

.Debit card requires an account in the same bank of which you need a debit card, while for Credit Card you may or may not require an account in the same bank.

.We can also withdraw money from ATM machines on the cost of amount deduction from Credit Card. While in the case of Debit Card, You need not pay any amount. The withdrawal amount from ATM is fixed for Credit Card.

Eligibility Criteria for Credit Card/ Who Can Apply for Credit Card:

The eligibility for credit cards varies from one bank to another. These are the following some basic eligibility criteria for Credit Card:

. Age:

 Any person who wants a Credit Card should be above 18 years old. Some banks asked for age above  21. Age identity proof is required to justify the age of any person. The ID proof can be Passport, 10 mark sheet, Voter Card. Especially in India Aadhar Card is a must for age verification.

. Credit Score:

 A credit score is basically a tool that describes your ability to repay.

A credit score plays an important role in approving your loan or Credit Card while applying. For instance, You have taken some money from a bank as a loan. If you repaid you borrowed money(principal+interest) on time than your Credit score keeps good and with multiple Credit and Debit transactions along with payment on time helps in increasing the Credit score of any person.

But, if you delayed or unwilling not paid the amount you borrowed then it will affect your credit score decreases your ability to take any loan in the future.

The data give below with various Credit score and its Grades:
· Excellent – 750 and above
· Good – 700-749
· Fair – 650-699
· Poor – 550-649
· Bad – Below 550


 Applying for any Credit card, a person has to show his income proof or Only those person can apply who have a job or any business because bank checks whether a person is able to repay the borrowed money or not.

ATM Cash Withdrawal Charges: 

The borrower has to show a withdrawn of 2-3% of the deposit money in the savings account. The last three months' bank statement is required.

Eligibility Criteria for applying for Credit Card in India:

Nationality: The applicant should be Indian or Non-Resident of India
Documents Required to Apply for Credit Card
.Address proof – Passport/ Driving Licence/ Voters ID etc.
.Identity proof – Bank Statement/ Voter Id/ Driving Licence/ Pension Book etc.
.Income Proof – Bank Statement/ Pay Slip/ Income Tax return
.Pan Card
.Passport size photo

Types of Credit Card:

 Globally credit cards are differentiated in four categories

.Standard Credit card
.Credit cards with rewards programs
.Airline miles / frequent flier credit cards
.Credit cards for bad credit
.Specialty credit cards

In the Indian credit card market, there are a number of credit cards being provided by banks and financial institutions. These cards give a wide selection of financial profit to holders. Following are a variety of credit cards available in India :

.Co-branded credit card
.Cash Back Credit Cards
.Business Credit Cards
.Student Credit Cards
.Balance transfer credit card
.Airline credit card
.Silver credit card
.Gold credit card
.Platinum Credit Card

1. Co-branded credit card

A co-branded credit card is a card that is issued to the customer by any store or product selling a company in partnership with the banks. These cards give reward points and extra benefits when any customer will make his payment under these brand partners. Card have logos of both retailer and banks.  Visa and Mastercard usually make a partnership with these retailers to provide such benefits to the customer. For instance, Amazon, Flipkart, etc start providing their cards.

2. Cash Back Credit Cards

Several credit cards will now offer you cash back incentives for using their credit cards. Depending on how much your balance is and how often you use the credit card, you can earn cashback for your purchase. The cashback can be 1-2% of your purchased items.

3. Business Credit Cards

A business credit card is made for business owners and it offers the business owner the opportunity to keep business and individual expenses separate. The credit card may offer special business rewards and saving opportunity that goes above and away from what the individual credit card owner may have. Since money management is necessary for effectively running a business, the card may offer an expense management service that will allow you to keep the path of the outgoing money. You can attain additional credit cards for employees who may need them for travel expenses and such as well as have a higher credit border than you normally would on an individual credit card. for instance, Bussiness credit card help to small businessmen to build his credit score and it help them in borrowing large amount for there business in the future.

4. Student Credit Cards

Student Credit Card offers college students aged 18 or above  18. The main purpose of this card is to help students in building a good credit score before Graduating. Usually limit of this credit card is less than other credit cards. The validity of this card is 5 years. The joining fee of a student credit card is nill or very less. This credit card gives so many incentives to the students such as reward points, Cashback. For applying for this card, sometimes students have to show his student loan statement.

credit card

5. Balance transfer credit card

A balance transfer credit card is one in which you can transfer some of your debts and pay the sum off at a 0% interest rate for a set period of usually between six and 14 months.

6. Airline credit card

Airline credit cards that earn reward miles for discounted or free flights are a must-have if you are a frequent flyer. Earning these valuable benefits can save a small fortune or free upgrades for your travel needs.

7. Silver credit card

Silver credit cards have been around since the beginning of credit cards in the mid-1950s. Today silver cards have been surpassed in prestige by gold credit cards and platinum credit cards and so have more normally come to be known as standard or basic credit cards.

8. Gold credit card

A gold-colored credit card, generally issued to customers with above-average incomes, that may include additional benefits, for example, an overdraft at an advantageous interest rate, and may have an annual fee.

9. Platinum Credit Card

Platinum credit cards are generally offered to those individuals with good credit ratings and very high income. Platinum credit cards have many benefits and features compared to a silver or gold credit card. The conventional school of thought would find platinum credit cards to be a status symbol. However, relaxed rules and upper limits have brought them within reach of the average person too.

Advantages of Credit Card:

.Give Power to Purchase: 

A Credit Card empowered us to do big purchases. A credit card gives us a liability to make big payments. for instance, while shopping, you can purchase any expensive thing within a minute. You don't need to think about it.


 A credit card gives many reward points on purchasing anything(booking airline tickets, shopping, movie tickets, electricity bill and fuel payment, gas bill payment, etc). You can redeem these points on your next transaction.

.Instant Discount:

 Nowadays if you are purchasing a mobile phone, clothing, footwear, etc e-commerce website gives facility of instant discounts. for instance, if you are purchasing a mobile phone, it shows the price of 10000 Rs and there is an offer of a 10% instant discount .on applying this coupon your product would be 9000 Rs.

.Cashless Convenience:

 Credit cards reduce the need for carrying cash. Now many retailers are accepting Credit Card.
.Use during Emergency: There can be many times when you face a problem of arranging money in case of (paying hospital bill) or any emergency period, a credit card is a good option for arranging a good amount.


Credit cards help to trace your monthly expenses in the form of digital bill payments.
.Build Credit History: Credit Cards help in making a good credit history. By responsible use of credit cards over a period of time, you can make good credit history for future loans.

Disadvantages of Credit Card:


A credit card is a gateway to debt when it is not used in a proper way. for instance, If you ignore your credit card bill payment over a month to month then with huge interest rates and late charges it will increase your debt.


 There are many frauds interrelated with Credit cards. For instance, while making payment sometimes the retailer misuses your credit cards, you can face different fraud calls regarding reward points. They asked for your credit card numbers by saying that it is required in getting reward points.
.Overspending: With continuous use of Credit card, you got used too many purchases and finally start doing overspend. This will create a burden on you in the form of interest rates and late payment fees.

High-Interest Rates:

 Credit cards are boon if you are using it in a proper way and cleared all dues on time but if you delayed or ignored repayment then it will create a big problem for you because interest rates are very high (0-25%) on the spend amount and it increases with time.


After discussing all pros and cons of Credit card, I would like to conclude that  Credit Card is boon if you use it properly because it gives so many extra perks(such as reward points, cashback, ample time for repayment and many more), but if you failed in using it properly it will become a blunder for you in the form of mounting debt because its interest rates are very high.

If anybody wants to apply for SBI CREDIT CARD. Then He/She can contact the following.

SBI Credit Card


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