Benefits of a credit card
You can own a credit card and enjoy a host of benefits, such as short-term,
zero-interest loan for every purchase, no worry of carrying various currency
denominations as it is a useful
alternative to cash. It helps in building the cardholder's credit history.
Credit card issuing entities and institutions keep a complete record of the
transactions that are made by their credit card holders. Basic routine charges
are applied by the issuing entity on the usage of the credit card. Some common
charges on credit cards include credit card fees or joining fees, annual fee,
late payment charge, duplicate statement fee, cash withdrawal, service tax, ECS
or cheque return charge, foreign currency transactions and over limit fee. A
grace period, or a minimum number of additional days within which a cardholder
can make his credit card bill payments without incurring any interest or
financial charges is offered. If payment is not made within the grace period,
then a credit-card issuer charges additional fees. Cash withdrawal fees are
charged higher than the fees that may be charged for regular credit
transactions. A mandatory service tax is imposed by the government on credit
card transactions and can increase the final end cost that is incurred by a
credit cardholder. Credit cards give the card holder the option to make
payments in domestic as well as in foreign currency. Every credit card has a
credit limit that is set on the card. This limit is determined after analyzing
the credit worthiness of the cardholder. It offers various features, such as
reward points, gift coupons, vouchers, cash back and extra discount on
purchase. There is a specified credit limit for purchases and for cash
withdrawals with credit cards. Credit
cards can be of the following types, Rupay Credit Card, Master and Visa Credit
Cards, depending upon the payment network the card provider uses. EMI
facility is also offered on a credit card wherein the credit card holder has
the privilege to convert his credit card purchases into EMIs. Every Bank has a
minimum transaction amount for availing the EMI facility. Credit cards with
lost card liability or Insurance protects card holders against forged
transactions. This insurance is offered for up to 48 hours prior to reporting
to loss of card. Credit card balance transfer allows the card holder to
transfer outstanding balance in a credit card account to an account held at
another credit card company. This balance transfer on a credit card allows you
to repay the outstanding balance at a lower interest rate which the other
account offers.
