Credit Card

What is Credit Card?

A credit card is the rectangular card having black strip and chip issued by finanacial institution. You can use it to pay for your shopping or in some case you can also borrow cash money from it. In other word you can say that it is pre approved loan by the financial institution with some terms and condition. And through your credit card you can use that pre approved loan amount for shopping or do online payment. In return you have to pay the amount used within the time, given by your bank with some interest.

How to use credit card?

Its use is similar to the debit card. If you have used debit card there is nothing any difference. While shopping you have to give credit card to the shopkeeper. He will swap it same like debit card. Like debit card it has also 4 digit pin. If needed you have to enter pin in swap machine and payment is done. Now while doing online payment you have to give card number, cvv and the pin and the payment is done. Wherever you go you have to carry the credit card with you. Doesnot matter you have balance in your bank or not. You can use the money in the credit card upto certain limit depending on which type of credit card you are using.

How Credit card work?

Before applying for credit card you must know how credit card work for you. When you are taking credit card you can see some balance over there i.e. 100000. It means you have one lakh rupees of pre- approved loan which you can use when needed. Difference between loan and credit card is in loan you will get full amount in your account for which you have to pay emi and interest from very first month. But in case of credit card you are not getting the loan in your account. It will remain in the credit card you can use it as per your need. The amount that you have used for shopping or payment will be your debt i.e. laon you have taken.

For example if you had done the shopping of 60000 out of your card limit of one lakh. It means you are in a debt of 60000. Whatever shopping you have done for a month. A bill is generated in you billing date. ie 60000 will be your bill now you have to pay this bill by your due date . If you pay after your due date then you have to pay interest with it which is bit higher than regular loan you borrow from bank.

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