Credit Cards
A credit card is a piece of plastic about 3.5 x 2 inches in size. Some of the features of credit cards are:
Logos: The credit card carries logos of the card association (Visa, MasterCard) as well as that of the card issuing bank (ICICI, HDFC and so on) in the front.
Number: The credit card number is embossed in the front. This is usually a 16-digit number. The first digit symbolises the major industry. Banking industry cards usually start with 4, 5 or 6. The first six digits of the credit card number identify the card issuing bank. The next nine digits denote the individual’s account number. The last digit is a check digit.
What Is The Difference Between Platinum Titanium Gold And Silver Credit Cards
Titanium, platinum and gold are the premium credit cards. Basically, these are the terms used by card-issuing banks to differentiate between the levels of services offered on each card. In premium segment, titanium cards give higher reward points, more privileges and discounts. But at the same time, these cards attract the highest fees and service charges. On the other hand, there are standard credit cards on the lowest segment. These cards have got very low or no annual fees, and do not offer as many discounts as a titanium card would. Basically, these are no-frills, low-cost cards offering benefits of a credit card. This is how you can classify the credit cards from the most expensive to least expensive.
* Titanium cards: Most expensive in terms of fees, and also give access to most privileges
* Platinum cards
* Gold cards
* Silver cards
* Standard cards: Least expensive in terms of fees, and also low-cost, no-frills cards
Credit Card FAQs
What is a Credit Card?
A Credit Card is a plastic card that makes payments convenient. With it, you have the option of making purchases or withdrawing cash when you want, and repaying the amount over a period of time.
What are the eligibility conditions for a Credit Card?
The credit card eligibility varies from the type of card you applied for. In general the basic eligibility includes minimum income criteria for both individuals and company/Firm.
Apart from it, if card is applied on Company/Firm a/c, latest balance sheet, Profit & loss a/c., Board resolution is required. If card is applied on personal a/c, latest Salary slip / Form 16 or IT return copy may be required. Photograph of applicant/s and address proof is a must.
What are the interest rates charged by Credit Card?
Normally, the credit card interest rate charged by the banks varies between 2% to 3% per month.
What is the best way to select the cheapest Credit Card?
Before you choose a Credit Card, get the answers to a few key questions. The answers to most of these questions can be found in the disclosure included with the Credit Card application.
What kind of card is it?
There are many different types of Credit Cards to choose from. Understand what kind of card you're applying for before filling out the application. This will help you make sure you're applying for the right card.
How are you going to use the Credit Card?
Do you plan to pay your balance in full each month? If so, a charge card might be the best option. Will you be using your card for balance transfers? You should look for a card with a low interest rate on balance transfers. Do you plan to carry a balance from one month to the next? A Credit Card with a low interest rate is ideal.
What's the annual percentage rate?
The annual percentage rate, or APR, is the percentage applied to balances that you carry beyond the grace period. The higher the APR, the higher your finance charge will be when you have a revolving balance. Most Credit Cards have a different APR for purchases, balance transfers, and cash advances. Make sure you know the APR for each.
How long is the grace period?
The grace period is the amount of time you have to pay your balance in full before a finance charge is added. The period is usually expressed in days from the billing date, i.e. "28 days from the billing date." Longer grace periods are better because they give you more time to pay your bill without incurring a cost for the convenience of using credit. If you already have a balance on the Credit Card, new purchases may not have a grace period.
What are the fees?
You should know the amount of any credit card fees and the circumstances under which the fees are applied. The most common types of fees include: annual fee, late fee, and over-the-limit fee. You may also be assessed fees for paying your account over the phone, requesting additional copies of your statement, or for having your check returned.
How is the finance charge calculated?
The Credit Card company's method of calculating the finance charge has an impact on the amount of the charge. Some methods consider only the current month's balance while others consider the current and previous months' balances. New purchases may or may not be included in the calculation. Common methods of calculating your finance charge include the average daily balance and double billing cycle method. Of these two, the average daily balance method is the least expensive.
What is the credit limit?
The credit limit influences your purchasing power. If you're new to credit, it's wise to start out with a low credit limit to become familiar with responsible Credit Card habits. Some financial situations allow a higher credit limit. Be wary of no-limit Credit Cards because they can sometimes look maxed out on your credit report. This can have a negative effect on your credit score.
What are the rewards?
Some Credit Cards offer rewards for using your Credit Card. Make sure you fully understand the reward structure and the amount of purchases you have to make to receive the reward.
What is a MasterCard or a Visa card?
MasterCard and VISA are both international payment systems who franchise member banks to issue cards with their brand name and provide settlement service for card payments to their franchisees globally.
What are the documents required for obtaining a Credit Card?
If card is applied on Company/Firm a/c, latest balance sheet, Profit & loss a/c., Board resolution is required. If card is applied on personal a/c, latest Salary slip / Form 16 or IT return copy may be required. Photograph of applicant/s and address proof is a must.
What is grace period of a Credit Card?
It is a period of time during which you are allowed to pay your Credit Card bill without being charged a finance and/or late fee. This period is usually 18-55 days.
What is the mode of payment for Credit Card borrowings?
There are many easy ways to pay your monthly Credit Card bill such as:
Through ATMs
In case you have saving or current account in the same bank, you can just walk in to the ATM machine, at any time and transfer the bill amount from your savings or current account to your Credit Card account.
Through Net Banking
In case you have saving or current account in the same bank, you can transfer the card bill amount from your savings or current account to the card account online.
Standing Instructions
If you have an account with the same bank, you can instruct them in writing to automatically debit your bank account with either the minimum amount due or total amount due of your monthly outstanding on your Credit Card. Your account with the Bank should be a sole account or a joint account with an 'any' or 'either' signing mandate.
National Electronic Funds Transfer (NEFT)
You can transfer funds from any other bank account to make your card payments. Credit will be reflected within 1 working day.
Drop-box option
You can also drop a local cheque, payable to your 16-digit card number, at any one of the drop boxes located in ATMs and branches of the concerned bank in your city.
Over the counter
You can also walk into any Bank branch and pay by cash.
What are the types of Credit Cards available?
Since each consumer's financial needs are different, it makes sense that there are different types of Credit Cards. Before you apply for a Credit Card, become familiar with the various kinds of Credit Cards to make sure you're choosing the best Credit Card for you.
Standard Credit Cards:
The most common type of Credit Card allows you to have a revolving balance up to a certain credit limit. Credit is used up when you make a purchase and made available again once you've made a payment. A finance charge is applied to outstanding balances at the end of each month. Credit Cards have a minimum payment that must be paid by a certain due date to avoid late-payment penalties.
Premium Credit Cards:
These cards offer incentives and benefits beyond that of a regular Credit Card. Examples of premium Credit Cards are Gold Credit Card and Platinum Credit Cards that offer cash back, reward points, travel upgrades, and other rewards to cardholders. Premium cards can have higher fees and usually have minimum income and credit score requirements.
Both standard Credit Cards and premium Credit Cards have specific types of Credit Cards. Student Credit Cards, zero percent interest cards, and travel cards are just a few types available.
Charge Cards:
Charge cards do not have a credit limit. The balance on a charge card must be paid in full at the end of each month. Charge cards typically do not have a finance charge or minimum payment since the balance is to be paid in full. Late payments are subject to a fee, charge restrictions, or card cancellation depending on your card agreement.
Limited Purpose Cards:
Limited purpose Credit Cards can only be used at specific locations. Limited purpose cards are used like Credit Cards with a minimum payment and finance charge. Store Credit Cards and gas Credit Cards are examples of limited purpose Credit Cards.
Secured Credit Cards:
Secured Credit Cards are an option for those without a credit history or those with blemished credit. Secured cards require a security deposit to be placed on the card. The credit limit on a secured Credit Card is equal to the amount of the deposit made. Secured Credit Cards have revolving balances depending on the purchases and payments made.
Prepaid Credit Cards:
Prepaid Credit Cards require the cardholder to load money onto the card before the card can be used. Purchases are withdrawn from the card's balance. The credit limit does not renew until more money is loaded onto the card. Prepaid cards do not have finance charges or minimum payments since the balance is withdrawn from the deposit. Prepaid cards are similar to debit cards, but are not tied to a checking account.
Business Credit Cards:
Business Credit Cards are designed specifically for business use. They provide business owners with an easy method of keeping business and personal transactions separate. There are standard business credit and charge cards available.
What is a Credit Limit?
Credit limit is the maximum amount you could spend / borrow using your Credit Card. This limit is determined by various personal details like your income, source of income etc. The credit limit is normally revised upwards or downwards based on your previous year's track record in terms of spending and repayment.
