A credit card is a type of card typically issued by banks or credit unions which enables the holder of the card to borrow money to purchase items or use services. Depending on the agreement, a certain degree of payment is required, usually with a due date to avoid any penalties or interest. It is important to pay attention to the credit limit provided by the institution and, for the most part, credit cards are accepted widely by merchants.
This is how it functions:
-The card issuer pays the merchant’s bill and the account holder settles with the card issuer later.
-Every month, card holders receive a bill which outlines their purchases and any outstanding debts.
-Pay on or before the due date to avoid interest fees, the order of payment includes: full balance, minimum amount or simply add interest.
-Additional functions to credit cards include rewards such as foregone interest fees, attempt to build a positive credit score or be able to prevent fraudulent activity.
-This differs with debit cards as the funds for those cards are drawn directly from the bank account instead of acting as a line of credit or a short term loan. I hope this explains everything well. Do reach out if you want clarification on anything.
Let’s list out the merits and demerits of using a credit card:
Pros:
-Comfort: Credit cards are useful in a lot of situations such as making payments online, traveling, or in case of emergencies where cash is not a viable option because they are universally accepted.
-Helps Build a Credit History: Using credit cards responsibly gets you a positive credit history which is useful for paying loans, mortgages, or renting. Accurately paying on time and maintaining low balances helps improves your credit score.
-Rewards: Spending money on some cards give you cashback, travel miles, points, or discounts, a lot of perks that allow you to save money while also spending money.
-Fraud Protection: Disputing charges for cash or debit is tedious compared to the ease with a credit card. Most issuers provide limited liability, often to $0, which takes away the stress of theft or misuse.
-Emergency Funds: Without needing immediate cash, a credit card provides a safety net for unanticipated expenses such as medical bills, car repairs, and so on.
-Grace Period: You can borrow without interest if you pay the full balance by the due date which is usually 21-30 days after a billing cycle ends.
-Consumer Protections: Some cards offer greater warranties, purchase protection, or return guarantees than what merchants themselves provide which allows more extended use.
Cons:
-High Interest Rates: High interest rates (usually 15-25% APR or more) can be costly, particularly if you maintain a balance because interest accumulates quickly.
-Debt Risk: Credit is too easy to obtain which can lead to indiscriminate spending, resulting in a debt trap that may be too hard to escape.
-Fees: Accounts with annual fees tend to have late payment fines, balance transfer fees, or foreign transaction fees which may be more costly, especially for premium cards.
-Credit Score Damage: Payment defaulting and credit card usage can reduce one’s credit and damage prospects for future finances.
-Temptation to Overspend: The mindset to “buy now, pay later” can encourage spending beyond one’s means, which is easy with high credit limits.
-Fraud Still Requires Effort: While the liability one is subjected to may be low, it can also be troublesome to deal with fraud by replacing cards or disputing charges.
-Not Always Accepted: Certain small businesses or vendors may not accept credit cards, limiting the places where the card can be used.
-Ultimately, credit cards are effective financial instruments provided they are managed well – clearing the outstanding balance monthly promotes usage and guards against consequences. Otherwise, overspending can become expensive. What’s your take on the idea of getting one after reading this?
Best Life Time Free Credit Cards in India
1: Amazon Pay ICICI Credit
Advantages and Benefits of Amazon Pay ICICI Credit Card
The features and benefits of an Amazon Pay ICICI Credit Card are as follows:
No annual or joining fee charged.
There’s no limit to the reward points that can be accumulated.
Reward points earned has no expiration date.
Over a thousand partners on Amazon Pay and Amazon.in offer reward point redemption.
Non-cost EMI available for three or six months on Amazon.in.
Every single reward point (1 reward point=1 rupee) is added to amazon pay as cash automatically.
2: Fibe Axis Bank Credit Card
Fibe Axis Bank Credit Card is a lifetime free RuPay card offered in association with the lending platform – Fibe. This card presents cashback on all transactions with enhanced earning on dining out, entertainment, and commuting. Currently offered to Fibe customers only, this card also claims to be the first numberless card in India which provides additional security features, as vital details such as the CVV are no longer printed on the card. Fibe Axis Bank credit card features are listed below, keep reading.
3: Scapia Federal Credit Card
Scapia Federal Credit Card is a co-branded card tailored for users that travel frequently. This is a perfect travel credit card as it has no forex mark-up fees. Whenever users spend money on the card, they earn Scapia coins, including bonus earning when 20% coins are earned on travel booking made on the Scapia app. Users can book flights, train/bus tickets, hotel accommodations, and even apply for visas through the Scapia app to certain countries. As with most travel credit cards, there are additional features which include unlimited access to domestic airport lounges as well as converting travel spends into no cost EMIs. If you would like to learn more about the Scapia Federal Bank Credit Card and how it can improve your travel experience, continue reading.
4: IDFC FIRST Wealth
IDFC FIRST Wealth is a credit card targeting high-income consumers (Rs 36 Lakh in annual income), but is lifetime free. The card has 2 clear benefits – one that it is lifetime free and enjoys reward point expiration. Additional features like complimentary lounge access, golfing perks and low forex mark up make the card even more valuable. Nevertheless, the initial value offerings of IDFC First Wealth have significantly eroded over time. It is a card for higher income earners who want to avoid paying any annual fees and do not mind the lower rewards associated with entry level cards. Otherwise, HDFC Diners Club Black, HDFC Regalia Gold, and SBI Card Elite have much better value, but come with an annual fee of 2500 to 10000 RS.
