The credit card is one of the most innovative products amongst all the financial tools available out there. When it is used well, a credit card serves to be a flexible & secure way of paying & managing finances. A credit card allows you to spend money on credit. When you have a credit card, it is like having a loan for the given amount that you spend by using the credit card. In this article, we will help you know everything you need about credit cards & its potential benefits.
How does a Credit Card Work?
By allowing you to spend money on credit, you are able to spend a pre-defined limit of money using the credit card. The limit offered to you for spending using a credit card would depend on the provider to which you are supposed to pay the money back. When you are able to pay off the credit card bills every month, there is no need of paying any additional interest on the amount that you have borrowed from the credit lender. Though, when you go for making cash withdrawals using the credit card, there is some interest that you are required to pay on a daily basis. This is the reason the experts recommend it to not prefer taking out cash from the credit cards.
In case you are not able to pay the credit card bills on time, then you are subject to paying a huge amount of interest over the money that you have borrowed. Therefore, it is important to note that you must keep paying the credit card bills on time to avoid any trouble.
Are You Eligible for Holding a Credit Card?
A credit card is not everyone’s piece of cake. As an account holder, you are supposed to pay attention to some important pointers before you set out to apply for the credit card. Here are some points to consider:
- You must be at least 18 years of age while applying for the credit card. With some specific credit cards & lending companies, the age limit has been set to a minimum of 21 years.
- While holding the credit card, you must realize that you will be required to make the minimum payment every month –when there is an interest-free period going on as well. As such, you can set up the Direct Debit method for paying the full monthly balance at once. You can also set a particular limit as per your convenience towards paying the credit card bill every month. This implies that you are not required to miss any payment that might lead to unwanted charges or even the loss of your introductory rate. Moreover, missing or delayed payments could also affect your overall credit score negatively.
- When you apply for the credit card from a particular merchant, you will most likely undergo a proper credit assessment by the given card provider. A good credit score will enhance your chances of ensuring a successful application of the credit card. It could also provide you access to additional offers & discounts on the interest rates.
Features of Credit Cards
The main features of a credit card include:
- Alternative to Cash: Credit cards serve as the major alternatives to keeping cash all the time. You can make use of the credit cards towards making transactions without the involvement of any cash.
- Credit Limit: Before using your credit card, you must know about its credit limit in order to remain safe from additional fees.
- International Payments: Your credit card can be used for making payments in both domestic as well as foreign currencies.
Benefits of the Credit Card
- Ease of Use: One of the major benefits offered by the credit card that it is extremely easier to use. These are also easier to carry around and are generally accepted at several places.
- Safer: Instead of carrying around cash, you can consider keeping a credit card to ensure the safety of your money.
- Various Offers: When you are able to maintain a good credit score, there are several areas wherein you can get lucrative offers & discounts.
Make the most of the credit cards now!