The advantage of a credit card over a debit card, which can only be withdrawn if there is money in the account, is that the customer can use this card to make transactions within the limits already allowed by the bank, even in the event of an emergency, or if there is no money in the account. The bank will set a credit limit on each card commensurate with each person's income and repayment balance.
For example, if the limit of the credit card issued to you by the bank is Rs. 1 lakh, you can make purchases up to Rs. 1 lakh. In addition to purchases, customers can also withdraw cash from an ATM using a credit card. However, the entire credit limit given cannot be withdrawn in cash through ATMs. Such a cash limit is usually set at 20 to 40 percent of the credit limit. If a person with a credit limit of Rs 1 lakh has a cash limit of 20 per cent, he can withdraw Rs 20,000 through an ATM.
A credit card can often be a boon in today's world of untimely treatment and possible delays in earning income.
The advantages are many
Interest Free Term, Card companies (banks) allow an interest-free term for credit card purchases. But if the card companies did not know how to charge interest, it would work. Credit card companies charge interest rates on a monthly basis. It's nice to hear that it's three percent per month (interest rates vary from card to card). But with good credit, you might find exactly what you need.
The first thing you need to know to capitalize on this is the billing date of the card. The interest free period is usually 20 to 50 days. For a person with a billing date of the 13th of each month, the card company will actually have to pay the amount due for purchases made from the 14th to the 13th of each month for two of each bill statement due date.
Date Purchases Amount
14 March Grocery 400
20 March Fabrics 6,000
31 March Bakery 600
01 March Jewelery 15,000
Bill
13 March Bill Date to be paid: 22,000 Minimum amount: 1,100
The minimum amount is 5% of the total due date paid at Due date, May 2
If you can pay the full amount of Rs 22,000 on due date to the credit card company, you do not have to pay even a single rupee in interest.
Therefore in Next Cycle, the purchase made on March 14 was available for 50 days with an interest free period till May 2. However, for purchases made on April 1, the interest-free period is 32 days. This benefit can be availed only if the full amount due (here Rs. 22,000) is paid by May 2.
Now if you pay only the minimum amount of Rs 1,100 on due date. In that case, interest will be charged at the rate of 3% per month on each purchase. Here's how to charge interest at 3% per month for 17 days from May 3 to May 20 if no new purchases are made and the balance is paid on May 20 without paying the due date on the 2nd date.
The remaining amount = 22,000-1,100 = 20,900.00
Interest (17 days) 20,900X3X12X17 = 350.43
100X365
Penalty for delay is 18% GST. Plus interest and penalty = 198.00
Total amount = 22,198.43
There is another danger lurking here. Subsequent purchases will not receive an interest-free period if the full amount is not paid on the due date. Therefore, from the date of purchase, interest will be calculated as mentioned above and will be charged from the customer. The advantage of a credit card is not only the interest-free term but also if used with care.
Expenditure can be tracked:
Often when money is counted no one keeps an accurate account. However, the exact amount of the cost can be deduced from the monthly statement used when using the credit card.
Discount and Cash Back:
Big credit card companies are offering discounts and cash back on various online shopping and regular shopping.
Additional facilities available:
Some of the additional benefits offered by credit card companies include free accident insurance coverage and airport launch free access.
Reward Point:
Companies offer Reward Points for purchases made through credit cards.
Reward points and their expiration date are given in the monthly credit card statement. You can get non-bad gift vouchers and cash back through this.
Rising Credit Score:
Broken credit scores can be raised through accurate credit card usage. Use the card only below the received credit card limit. The credit score can be increased by paying the full amount due on the due date.
Emergency Support:
A credit card can also help you to avoid getting caught up in some unexpected expenses when you are not ready.
Things to watch out for:
Know the available credit period and due date and check the statement accurately every month. This review will help you to avoid unnecessary expenses to some extent. Pay the full amount before the due date, excluding the minimum amount. Do not withdraw foreign currency with a credit card while traveling abroad. Also do not make purchases from abroad with this card. ATM with card If you can withdraw money from the machine, do not dare to do so as much as possible. In addition to the hefty interest payments from the date of withdrawal, a hefty transaction fee will be charged for cash withdrawals.
To make available:
All major banks have their own credit card or agreement with credit card companies, so you can approach the bank where you have the account. If not online, you will need to provide proof of identity and proof of income along with the completed and signed application form. The card will be issued on the security of a fixed deposit to those who do not have the income documents defined by the credit card companies or have a low credit score. The deposit can be refunded when the score improves or the defined income records are available.
