All You Need to Know About Credit Cards: Features, Benefits, and Risks Explained

 Today, you will get complete information about credit cards, including their advantages and disadvantages.

A credit card can be considered "plastic money" because it provides you with funds in the form of a card. This card guarantees you the amount of credit you have taken on the card. It gives you the ability to make payments regardless of the situation and even provides you with access to cash.

In this article, we will discuss all aspects related to credit cards in detail, including their benefits, drawbacks, eligibility criteria, and requirements. After reading this article, you will be able to expand your knowledge about credit cards and make informed decisions based on your personal needs and circumstances.

 

Credit Card full information

 

A credit card is a form of plastic money that remains available to the cardholder in the form of a plastic card. This card provides the guarantee of funds to the individual. It has the ability to make payments and provide access to money whenever needed. It works for all types of purchases, payments, and even cash withdrawals.

This card fulfills the individual's needs. In the present time, the usage of credit cards has significantly increased due to the global trend of buying, selling, and payment transactions. Therefore, whether desired or not, a person requires a credit card.

For any kind of transaction or payment, including international ones, a credit card becomes necessary. Credit cards differ from debit cards (ATM cards) in many aspects. While debit cards have limited usage within a country, credit cards are used on a global scale.

 

The process of obtaining a credit card and a debit card (ATM card)

 

The process of obtaining a credit card and a debit card (ATM card) is generally similar. Both require submitting an application at the bank. The application form for obtaining a debit card is filled out in the same way.

There are certain eligibility criteria for a credit card:

1. The customer must fulfill the eligibility criteria set by the bank in order to avail of the facility of a bank credit card.
2. The bank verifies the customer's financial transactions and personal financial profile.
3. If a person meets the required eligibility criteria specified for a credit card,
4. The bank then provides the cardholder with the facility of a credit card.

 

 

The eligibility criteria for obtaining a credit card

 

The eligibility criteria for obtaining a credit card are generally similar across most banks. Almost all banks require a minimum of 3 years of Income Tax Returns (ITR).

ITR serves as proof of your financial transactions.

It helps determine your eligibility for a credit card and the credit limit you qualify for.

Based on your ITR, the bank assesses the amount of credit they can provide you with.

If you do not file ITR or if you are a student or in need of a credit card, some banks offer this facility without ITR requirements.

For example, the State Bank of India provides credit card facilities even to regular individuals. To obtain this card, a regular individual needs to have a Fixed Deposit (FD) in their bank account.

Based on the fixed deposit amount, the bank offers a credit card facility to their customers.

The withdrawal and payment limit on the card can be up to 90%.

If you have deposited ₹25,000 in a fixed deposit, you can utilize up to ₹20,000 through the credit card.

Individuals who file ITR are not required to open a fixed deposit.

They only need to submit certain documents to their bank, such as:

• 3 years of ITR
• Aadhaar Card
• PAN Card
• Residential address

 

Can a credit card be obtained with a fixed deposit?

 

Yes, a credit card can be obtained through a fixed deposit (FD) as well. Many banks offer this facility where they provide credit card services based on the amount of the fixed deposit.

There are several banks in India that offer the convenience of a credit card against a fixed deposit.

Credit cards are also available for students, where a guarantor, usually their parents, is required.

Based on the Aadhaar card, the guarantor facilitates the availability of a credit card for the student.

If you have a critical need for a credit card but do not meet the eligibility criteria typically required for obtaining a credit card, you can still approach your bank manager. In such cases, it is possible to obtain a credit card with their assistance.

What is the credit card limit? Know about the limit of a credit card in Hindi
Every credit card has a certain limit, which determines how much you can spend and withdraw using the card. This limit is determined based on your Income Tax Returns (ITR).

Before issuing a credit card, you are provided with detailed information regarding the card.

Your credit score and financial eligibility are assessed to determine the card's issuance.

Credit card limits can range from INR 10,000 to several lakhs.

The specific limit depends on your profile, and the bank assigns you a credit limit accordingly.

 

 

You can have more than one credit card

 

You can have more than one credit card, but it can be costly. Banks generally try to provide a single card to an individual at a time. If someone already has a card, the bank may hesitate to issue another credit card. However, in certain circumstances, the bank may issue a second card based on the individual's needs and usage patterns.

You can definitely have more than one credit card, but it can be quite expensive. That's why most people prefer to keep only one credit card.

 

Advantages of Credit Cards:

 

Credit cards play a significant role in financial transactions and are especially useful for international payments. They provide a convenient solution for banking and purchasing needs that cannot be fulfilled through other means such as ATMs or e-wallets. Credit cards also offer protection in adverse situations. Previously, when cash was not available, people faced difficulties in making purchases and payments through ATM cards and other means. Credit cards have resolved all such troubles and made shopping and other transactions much easier.

 

You can load money into an e-wallet:

 

In the present time, e-wallets have gained popularity. The Indian government has also launched the BHIM app, which is known as UPI (Unified Payments Interface). Today, it is possible to make online payments and transactions through e-wallets for even the smallest purchases.

Even individuals who run small shops offer their customers the convenience of e-wallets. To make payments through an e-wallet, one needs to have funds stored in it.

There are situations when a person doesn't have money in their bank account. In such cases, apart from seeking help from someone else, there is not much they can do. However, if a person has the facility of a credit card, they can load money into their e-wallet using the credit card. This means transferring funds from the credit card to the e-wallet.

The payment for the credit card can be made later at the individual's convenience in the coming days.

 

 

 

You can make bill payments through credit cards and online payment methods from the comfort of your home. In the past, paying various types of bills such as electricity, water, and home bills, as well as telephone bills, required setting aside special time and standing in line at payment counters, wasting hours of valuable time.

Today, this process has become convenient through online payments. Individuals can make any type of pending payment, including electricity, water, home, and other essential bills, using online platforms. These payments can be made in just a few moments, allowing people to pay their bills easily from home or anywhere else without the need to allocate specific time for it. Credit cards also provide the convenience of bill payments. Through credit cards, you can make immediate payments, and it also allows for automatic payment of bills.

In other words, when any kind of bill is issued to you, your credit card can make the payment automatically and provide you with information about it. This kind of facility enhances convenience for individuals.

Additionally, you can withdraw cash from an ATM using a credit card. When you have a credit card, it can also serve as your ATM card. There are situations when there is no money in your bank account, but you need cash. In such times, your credit card comes to your aid. You can withdraw money from any ATM machine and quickly fulfill your needs.

So, credit cards offer you the flexibility and convenience to handle various financial transactions, including bill payments and cash withdrawals, ensuring smooth financial operations.

 

Money is not something you have to ask someone for. Life is a struggle, with its ups and downs. There are often situations when a person doesn't have money and they seek help from their relatives and acquaintances, but even there, they are disappointed.

During such times, a person feels helpless. In such situations, a credit card acts as a supportive friend. It proves to be a great help during difficult times. Through a credit card, you can withdraw cash and make payments to others. You can use your credit card according to your convenience.

You can also take loans. There are times in life when you need more money. Loan companies look at your creditworthiness and search for a reliable guarantor. In such times, a credit card also plays an important role. It not only improves your credit score but also serves as a guarantor.

Loan companies consider your credit card and verify it as a guarantor. After that, they take a step forward to provide you with a loan, once all the procedures are completed. A loan is a type of EMI (Equated Monthly Installment) that you repay month by month. Thus, EMI not only exists for other products but also serves as a helpful tool in loans.

You can also purchase goods on EMI. Many times, you come across items in the market or during online shopping that you like or need as per your requirements. However, due to a lack of money, you want to avoid buying those items.

In the future, you may not have enough money either. In such a situation, a credit card can be a blessing for you. A credit card provides you the convenience of purchasing goods on EMI. Some companies charge interest on EMI, while others offer interest-free EMIs. The duration of EMI can range from 3 months to 12 months, and the interest rate can vary from 1% to 15%. Within the given time, you can repay the cost of your purchase.

 

One of the key features of a credit card is its convenience for shopping abroad. In countries where an ATM card or e-wallet from one country may not be accepted or recognized in another, a credit card proves to be a boon. Credit cards break down all those barriers.

A credit card is effective for making purchases or payments at a global level. Whether it's for international travel or paying for a product/service in a foreign country, a credit card can be used in an incredibly easy and convenient manner.

In today's world, where online transactions are increasing, whether it's purchasing goods or availing services, everything is available online. Hence, the need for a credit card arises frequently during payments.

Credit card holders can easily access services that are rare for others to obtain.

Significant Discounts:
When making a purchase with a credit card, various types of discounts are offered. These discounts can also be obtained through online shopping. While cash and other mediums like ATMs, UPI, e-wallets, etc., require the full payment of the listed price, credit card companies provide substantial discounts.

These discounts can go up to 50% at times. Making payments in this manner proves to be a profitable deal for credit cardholders. Heavy discounts are usually available during festivals or special occasions throughout the year.

 

 

Rewards Points:

 

These days, all companies, whether you make a purchase or use a debit card, credit card, or e-wallet, offer you rewards points.

Reward points are provided everywhere and can be considered a form of cashback. You can use these points to purchase products.

Through these reward points, you can:

• Purchase products offered by the company through its rewards program.
• Make bill payments.
• Recharge your mobile phone.
• Buy movie tickets and much more.

Most commonly, rewards points provided by banks, debit cards, credit cards, etc., are used by individuals to purchase products.

Credit cards offer more reward points compared to other methods.

These reward points are a form of discount that you receive in the form of points. These points accumulate the value of the discount/cashback and provide it to you as points.

You cannot convert these points directly into cash. They are only available for making payments.

Whether it's shopping or any kind of bill, these reward points can be utilized for payment purposes.

 

 

When it comes to paying credit card bills, you typically get a grace period of about one and a half to two months. Credit card companies usually generate the bill around the 20th of the month for the transactions made during that billing cycle. You are then given approximately 15 to 25 days from the bill generation date to make the payment. During this time, you can choose to pay off the outstanding amount using various methods.

You can control your credit card transactions and monitor your spending through mobile applications provided by most banks. These applications allow credit cardholders to perform various banking activities, including managing and monitoring their credit card transactions.

To make the payment, you can use online or offline methods. If you have sufficient funds in your account, the payment can be automatically deducted from your linked bank account. Alternatively, you can visit the bank and deposit the payment by filling out a slip. Keep in mind that there may be service charges and GST (Goods and Services Tax) applicable to these payment methods.

You can also make credit card payments online using e-wallets or other online platforms. Credit card companies accept payments through various online mediums, but you may have to pay service charges and GST for these transactions as well.

Another option is to set up an auto-debit facility where the credit card company links your credit card to your savings account. On a specified date, the credit card company automatically deducts the outstanding amount from your savings account. To utilize this feature, you need to maintain sufficient funds in your savings account on the designated date to cover the credit card bill.

Overall, credit card bill payments can be made through multiple channels, including mobile apps, online platforms, offline methods at the bank, or automatic deductions from your linked savings account. The specific timeframe and payment options may vary depending on the credit card company and your banking institution.

 

 

 

Disadvantages of Credit Cards:

Possibility of Fraud: Credit cards can be used not only within the country but also internationally, which increases the risk of fraud. While debit cards provide secure transactions within the country, credit cards are susceptible to fraud, especially when used for transactions abroad. Credit cards do not always offer the convenience of One Time Password (OTP) verification for international transactions, making them more vulnerable to fraudulent activities. Most credit card frauds occur in foreign countries.

Expensive Cash Withdrawals: Initially, credit cards were not designed for cash withdrawals from ATMs. However, considering the need of individuals, some credit cards now offer cash withdrawal facilities. In situations where a person runs out of cash and has no funds in their bank account, they can withdraw cash from an ATM using a credit card. However, this cash withdrawal proves to be expensive if the payment is not made on time. If the withdrawn amount is not paid back within the specified time, credit card companies charge high-interest rates, sometimes up to 50% or more, making it a costly affair, particularly for the average or middle-class individuals.

High-Interest Charges: Credit cards are typically used by individuals who don't have immediate access to funds or face a cash shortage. In such cases, the credit card provides the person with the necessary funds. However, the repayment of this borrowed amount is usually given a grace period of about one month by the credit card company. Sometimes, individuals are unable to arrange the required funds within this one-month period. In such situations, credit card companies impose high-interest charges for delayed payments. These interest charges can be quite burdensome for the average person.

These are some of the disadvantages associated with credit cards. It's important to be aware of these risks and use credit cards responsibly to avoid financial losses.

 

EMI being expensive
An individual is compelled to purchase a product on Equated Monthly Installments (EMI) only when they face a shortage of funds. In such a situation, credit card companies help the person overcome the financial shortfall. However, in return for resolving this shortage, they charge a substantial amount of interest, which can go up to 50%.

Credit card companies take advantage of such situations. The person who can afford to purchase the product with limited funds ends up paying a higher price through EMI.

Additional charges for foreign transactions
Making foreign payments or conducting transactions using a card is convenient, but it can also be costly. This is because the credit card converts foreign currency into your local currency, and the credit card company levies a fee for this currency exchange. This fee is a percentage-based charge, and it is also subject to Goods and Services Tax (GST), which is an additional cost on top of the actual price.

If you use foreign currency worth ₹10,000, you may have to pay an additional fee of approximately ₹500.

This puts a burden on the individual's pocket.

Precautions while closing a credit card account
When closing a credit card, it is important to proceed with caution to avoid any regrets in the future.

To ensure that you don't face any regrets related to this matter, here are a few things to consider when closing your credit card account.

Taking these steps can bring several benefits.

 

 

1. Complete all pending payments Before closing your credit card, ensure that you have made all the necessary payments for your transactions, purchases, and outstanding balances. Failure to do so may require you to make additional payments later. Always remember that you cannot close your card without clearing any pending dues. In case your card gets closed without payment due to unforeseen circumstances, the bank will recover the outstanding amount, along with interest, based on your documents. Therefore, when closing your card while ensuring that all payments have been made, pay special attention to this aspect, considering future difficulties.
2. Cease automatic payments for utilities, loans, etc. In this fast-paced life, individuals prioritize convenience and comfort for themselves. Hence, they tend to avoid mental distress in any form. However, paying special attention to specific dates and payments can become a headache for a person. Therefore, one should set up automatic payments for all types of bills, such as electricity bills, telephone bills, house bills, etc. This way, any bill generated will be automatically paid. It is important to stop all payments that are linked to your credit card. Otherwise, when the payment reflects on your credit card account, you won't be able to make that payment after the card is closed. In such a situation, you will become a defaulter, so it is advisable to stop all such automatic payments.
3. Utilize accumulated reward points Learn how to use reward points earned through credit card transactions and purchases in Hindi.

When you make payments and transactions using your credit card, you earn reward points. It is advisable to utilize these reward points before closing your credit card. This is because after your credit card is closed, you won't be able to use these reward points, which is detrimental to you. You can use these reward points for various purposes, such as mobile recharge, purchases, or paying any type of bill.

4. Contact the bank in writing Credit cards come with certain risks. You can protect yourself from these risks by always remaining vigilant and avoiding fraudulent activities. It is better to close your credit card by submitting a written application to your bank. Written transactions, whether on paper or through mail, serve as evidence. In future risks, this evidence can work in your favor, so submit a written application to your bank for card closure.
5. Check your credit card score online Learn how to check your credit card score and details online in Hindi.

In today's online era, everything is available online, whether it's shopping or ordering food. Many companies provide opportunities to check your credit card score, status, and value online. There are several applications where you can view your credit card score. You can also check it using your PAN card or credit card, which indicates your eligibility for loans. However, be cautious about providing any personal information online as there is a possibility of fraud. Use websites or applications authorized by the Reserve Bank of India for checking your credit card score.

 

Some more Important details related to Credit card

 

 

 

Using a credit card always carries a risk because it provides the convenience of making payments at a global level. Unauthorized transactions with a credit card can be prevented through your understanding and vigilance.

Even a small mistake can result in significant financial loss.

Therefore, caution should always be exercised when using a credit card.

If you do not need a credit card, it is advisable to refrain from getting one.

If you already have a credit card, you can prevent financial losses by considering the following points regarding your financial transactions:

Control with Mobile:

You can maintain control over your credit card through your mobile device. Using your mobile application, you can personally manage all the transactions, payments, and activities associated with your credit card.

Deactivate international payments in the application.

If you need to make international payments in the future, you can activate it from your mobile at the time of payment.

This process can help you avoid international transactions.

For all payments made within the country, you will receive a One-Time Password (OTP) on your mobile from the credit card company.

Payment is only possible after entering the OTP.

Therefore, do not share the OTP with anyone.

You can protect yourself from financial harm.

In cases of fraud:

When using a credit card, there are instances where you unknowingly fall victim to fraud. Many incidents have occurred where a person had their credit card in their pocket, and a payment was made from their card in a different country or corner of the country.

The money is received through an SMS on their mobile.

This situation can cause a lot of distress.

It is also embarrassing because it involves financial fraud.

Someone else seizes the funds for which you work hard day and night within an instant, causing distress.

In such situations, do not panic!

If you have the credit card with you, visit the nearest bank ATM and use the card, whether you withdraw any amount or not. This will provide evidence that you were present at a different location during the fraud incident, with your card.

In other words, this proves that you are not responsible for the fraud.

Within three banking days, provide all the written information to your bank manager and also submit a copy of the complaint to the local police department. After this process, you can rest assured that if you have been a victim of actual financial fraud, the bank will reimburse the amount.

In other words, the bank will return the money to you.

If the bank does not return the money within 30 days, you can file a complaint with the Reserve Bank of India (RBI) along with all the necessary documents. The RBI assures you that it will take action to compensate you for the financial fraud you have experienced at its level.

 

 

 

Credit card fraud is common these days. Many people are troubled by credit card fraud. Sometimes, individuals become victims of fraud due to their own negligence or unintentional sharing of OTP or sharing all credit card information. If fraud occurs due to the individual's own carelessness, the bank is not responsible for their payment. The person has to bear the financial loss themselves. In such cases, many credit card companies also offer credit card insurance to their customers. Taking this insurance provides peace of mind to individuals. If any fraudulent activity occurs with the insured card, the bank is obligated to make the payment first. If the bank refuses to make the payment in any circumstances, the insurance company covers the amount of the fraud. To obtain this insurance, individuals have to pay a significant amount. Insurance companies charge anywhere from ₹5,000 to lakhs of rupees for providing insurance on credit cards, which can be quite expensive for individuals.

 

What should you do if you lose your credit card?

If your credit card is lost under any circumstances, immediately contact customer care and get your card blocked. Blocking the card ensures that no fraudulent activity can occur with it. After that, provide written information to your bank and apply for a new card. It is advisable to have this transaction documented, preferably in writing.

 

 

Certainly, I understand that you have considered the above points and have formed your opinion about credit cards. You may have found it useful or not, and have strong thoughts about it. However, if you do not engage in any international transactions or have no need for foreign exchange, it is advisable to avoid getting a credit card.

Using a credit card increases your expenses and involves associated risks. It is not necessary to make international payments only through a credit card. Nowadays, most of these transactions can be done using a debit card as well.

The ATM/debit card you already have can perform similar functions as a credit card.

Ultimately, if you do not need a credit card, it is better to refrain from getting one.

Does it bother income tax?

Certainly, credit card transactions fall within the realm of finance. However, it is closely monitored by income tax authorities as your bank and your PAN card or other private documents are continuously checked by the income tax department.

Therefore, all the details of your credit card are available to them. Any transaction you make with a credit card is legal, meaning it is recognized by the law, and you make the payment from your own account. In such cases, the income tax department does not bother you in any way or call you for any questioning.

Author's opinion:
The information provided about credit cards is based on factual data. It is written based on personal experience and usage. Its accuracy is based on my own assessment after thoroughly studying the credit card and the associated risks. You may be familiar with all the information about credit cards, but you may have also studied the risks involved.

When it comes to credit cards, it is advisable to assess the risks and benefits based on your own judgment.

Here, we are not endorsing any specific company or product.

When using the market, analyze all available products and companies and make efforts to bring them into use based on your own judgment.