In an ever-changing financial market, you need to ensure that you are using the best financial tools to enjoy varied benefits such as savings, purchasing power, and security.
The credit card is one such means of payment. From incredible offers to special amenities such as airport lounge access, the power of a credit card cannot be underestimated.
However, in order to use this tool to your benefit, it is important to understand the basics of this financial offering.
Read on for a crash-course on credit card facts and how you can use them to manage your finances.
What is a credit card?
A credit card is simply a payment tool issued by a bank that allows you to make cashless purchases.
Credit card issuers assign to you a credit limit and then you utilize this limit to make purchases or for other transactions.
If you are wondering how to use a credit card, it is simple.
Visit any retailer or service provider and swipe your card on the payment terminal.
You will then be prompted to enter your unique 4-digit PIN, which will authorize the transaction, given that the purchase amount is within your credit limit.
You can use the credit card online, by entering the credit card number and then using the PIN or OTP to make your purchase.
How do you qualify for a credit card?
To qualify for a credit card, you need to meet the issuer’s eligibility criteria. This criterion varies by the issuer.
Generally, you are required to maintain a credit score above 700 and you must be aged between 25 and 65 years.
You can also avail of credit card easily by approaching the bank with whom you hold an account as they are already familiar with your finances and are more inclined to offer you a tailored deal.
You can also apply via a pre-approved deal you can get from various other issuers or approach an issuer after checking their credit card offerings online.
Top 6 interesting credit card facts to manage your finances
Having a firm grasp on the basics is vital to understanding all the financial benefits of using a credit card.
To give you a complete rundown, here are some of the important credit card facts you need to know.
1. Purchasing power
A credit card adds to your purchasing power as you’re assigned a credit limit by the issuer.
Your credit limit is based on personal financial history and your credit score.
Generally, you have an increased purchasing power and this enables you to make big-ticket purchases, which may have not been possible before.
You also get a grace period of around 20 days before you need to pay off your credit card bill in full in order to incur zero interest charges.
Some credit card issuers also allow you to convert spends above a certain amount into EMIs to further ease repayment.
2. Fraud protection
Credit card issuers build in a great line of defense between your money and fraudsters.
Some issuers offer a zero liability policy for fraudulent transactions while others give you full control over your credit card spends from the convenience of your smartphone.
This helps you transact securely online and offline.
3. Reward system
An extremely beneficial perk of using a credit card is the reward system that most issuers have in place.
I bet you don’t know about this amazing credit card facts, right?
This system grants you points for every purchase you make or every milestone that you reach and these points can then be redeemed for exclusive deals such as air miles or lifestyle products.
Rewards points are a great way to save money while spending and the Bajaj Finserv RBL Bank SuperCard is proof of that.
Through its reward system, you can save up to Rs.55,000 annually.
4. Compare the interest rates
Each credit card comes with a different set of interest, i.e. the interest on the sum availed as credit.
All purchases made through your credit card are subjected to an interest rate known as APR (Annual Percentage Rate).
Calculate your payable interest beforehand and choose a card that offers the most competitive interest rates.
5. How credit cards can affect your CIBIL score
A credit card is a determining factor when it comes to building a good CIBIL score and developing a positive credit history.
It reflects your decisions and debt management. If you manage to balance your spending each month, it has a significant positive impact on your CIBIL score.
This makes you eligible for procuring financial tools and products in the future across better terms.
6. Fees and penalties for late payments
This is one of the important credit card facts most people don’t know. Before you avail of a credit card, it is vital to know the fees and charges involved.
The annual fee is an especially important one to keep in mind as it differs depending on the type and tier of the credit card you’ve opted for.
This has to be paid annually and some issuers completely waive off the fee if your annual usage is high enough or if they have a special offer that applies to your spending habits.
Always choose a credit card that matches your needs as this is sure to earn you maximum rewards and even save you money.
You should also actively seek out credit cards that give you access to the best retail offers, as this will further add value to your purchases.
The Bajaj Finserv RBL Bank SuperCard is a great option as it allows you to enjoy amazing discounts, earn cash back, and brings you exclusive credit card offers.
These range across varied categories like apparel, entertainment, food and even travel purchases, all while letting you earn reward points for your spends.
In addition to the fact that you get up to 20,000 reward points as a welcome gift, you can redeem these points to save even more with every purchase.
An added perk is that you can convert any spend over Rs.3000 into EMIs.
To make the most of these benefits, be sure to check your pre-approved offer first to hasten the application process and enjoy instant approval online.
Now that you are armed with the credit card facts above, you will apply this knowledge in managing your finances.
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Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. You can find Gaurav on Linkedin.