Features and Benefits of Credit Cards

Having a credit card from a specialized bank is a great way to manage all your finances during any critical condition of the cash crisis. A credit card allows its customer to provide funds at right time, make purchases, and repay those amounts at a later stage.

The best part of having a credit card is that it is widely accepted and provides great financial freedom if it is used judiciously. 

If you are a new credit card user and want to know more about them and their features and benefits, dive into the article below. 

credit card

Features of a credit card

Following are some features of a credit card. 

EMI Payments 

A credit card can be used to purchase some high-end items at affordable EMIs and pay later. These credit amounts can be repaid as smaller amounts over a flexible duration of 3-36 months, depending on your bank.

Easy Approval 

If you want to purchase something and don’t have money right in your hand, then you might go for a loan which is a lengthy process. You can simply get a product with a credit card. 

Application for a credit card is very easy as well that can be done both online and offline. Apart from that, the eligibility criteria to have a credit card are very easy to fulfill, and you just require certain basic documentation to get a card approved.

Customized Card Limit 

The limit of a credit card varies from card to card depending on the different lenders. It greatly depends on your credit score and debt-to-income ratio. Keep in mind that, the higher the credit score of the lender, the higher could be your credit limit.

Bonus points

The competition among the credit card different providers is adamant. Everyone wants their customer to have a credit card from their own company.

Thus they offer various incentives in a trendy or fashionable way to improve the sale of their products in the ordinary course of busFollowing this trend, different credit card providers also provide bonus points to the customers on the financial value of the transactions compiled by them. 

Balance

The balance on your credit card at any given time refers to the total amount of money that you owe, including your purchases, finance charges, and fees 

The higher value of your credit card balance, the lower the available credit that you have left for making additional purchases. Higher balances raise your chances of credit utilization but lower your credit score.

hands holding credit card

Credit Card Fees

While using credit cards, customers may occasionally be hit with credit card fees, which are usually based on a certain type of transaction or as a penalty. 

The various types of common credit card fees include the annual fee, finance charge, late fee, and over-the-limit fee. 

However, some of these fees can also be avoided by the customers simply based on how they use your credit card. For example, a customer can avoid paying a late fee by making a credit card payment on time each month. 

APR

The annual percentage rate (APR) refers to the interest rate which is applied to any balance that you carry past the grace period. 

Different credit cards can have different APRs for various types of balances, like balance transfers or purchases. Balance transfers and cash advances always have higher APRs than purchases.

Grace Period

The grace period refers to the amount of time you have to repay your balance in full before any finance charge is applied.

If you carry some balance from the previous month, you may not have a grace period for your new purchases. However, balance transfers and cash advances typically don’t have any grace periods.

Record keeping of all transactions

Credit card issuing entities such as different banks or NBFCs usually keep a complete record of all transactions which are made by their credit cardholders. 

Such a record of transactions helps these financial entities to raise appropriate billing amounts payable by their cardholders, either on a monthly or some periodic basis.

Benefits of credit card

There are a great number of benefits of credit cards. Let’s discuss a few of them. 

Buy on credit

What makes a credit card attractive among customers is the credit limit that is allowed to the cardholder. A customer can buy anything within that credit limit and pay later.

The monthly budget of a customer doesn’t get affected, even if he/she is buying items of high value on credit. 

hands holding credit card and using

One most important benefit that the credit card offer is that it can convert the total amount of purchases by a customer into low-cost EMIs that enable them to repay it easily over a period of time. Moreover, it also helps in revolutionizing the shopping experience.

Discounts and cashback

The greatest advantages of credit card include the discounts it offers on some of the customer’s favorite entertainment and dining outlets, travel and shopping apps, etc. 

Customers can also enjoy fuel surcharge waivers at petrol pumps across the country if they pay through credit card. 

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Freedom From Cash 

A credit card provides freedom from cash by eliminating the need to carry cash for shopping. It also facilitates shopping online at the convenience of a customer.

Improve your credit score:

The perks and benefits of credit cards do not only limited to shopping on credit; instead, it also helps a customer to improve his/her credit score.

Anyone who knows the proper usage of a credit card and credit period, and repay their credit amount used on time. In this way, a credit card can boost the credit score or CIBIL score of a credit score.

A good credit score helps a customer to obtain loans easily, without any difficulty in the future.

Travel perks.

Some credit card companies provide travel credit cards to their customer that will give access the customers to VIP lounges in airports and free checked bags.

some premium credit cards also reimburse their customers for the cost of applying for membership in the TSA PreCheck or different Global Entry programs that help them to avoid long security lines at airports. 

Other travel-related perks that most credit card companies offer their cardholders include different roadside assistance and rental car insurance. 

Aids payment in domestic and foreign currency

Credit card aids customer or cardholder to make payments in any currency of their choice. 

In other words, it basically provides its cardholder a unique facility to make payments either in their domestic or native currency or if necessary, also in foreign or non-native currency, that too as and when required.

Conclusion

A credit card is a very essential tool that provides convenient financial short-term lending facilities to a credit cardholder. 

However, the safety and security of credit card are also questioned and is of prime importance. 

The protection of a credit card depends on its physical protection of it as well as the confidentiality of the credit card number, card value number (CVV), personal identification number (PIN) and other sensitive credentials which are closely associated with the credit cardholder.

*image source from Google

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