What is a Credit Card..How it is Work?
What is a Credit Card..How it is work..?
A credit card is a financial instrument which allows you to buy now and pay later. Basically, you borrow the money from the credit card company when you need it, and repay it when you can.
There are different credit card categories that have different credit limits based on your salary bracket. You can not make any purchases beyond the credit limit on your card.
How does a Credit Card Work?
Credit Cards offer an interest free holiday period ranging from 30 days to 50 days, depending on the date of purchase and your card’s bill date.
If you repay the amount within the holiday period on offer, you don't have to pay any interest on the borrowed amount.
Credit cards charge anywhere from 2-4% interest per month if you don't pay the dues within the due date. So, make sure to repay well in time to avoid paying a heavy charge on your purchase.
Other charges, like annual charges and joining fees of the card too can be considered before opting for one.
How are Credit Cards Useful?
A credit card can be useful in case of a financial emergency or while travelling.
Credit cards offer you reward points every time you use it.
You can accumulate these reward points and redeem them for gifts from retailers which have tie-ups with the card companies. Some cards also offer cash backs ranging from 2% to 10% for certain selected retailers, airlines, brands, etc.
You should also consider the annual charges and joining fees before opting for a particular credit card.
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