A credit card is a small plastic card issued to users as a system of payment.It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services.The issuer of the card create a revolving account and grant line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.
Credit cards are issued by a credit card issuer, such as a bank or a credit union, after an account has been approved by the credit card provider, after which card holders can use it to make purchases at merchants accepting the card.Each month, the credit card user is sent a statement indicating the purchases undertaken with the card,any outstanding fees,and the total amount owed. After receiving the statement, the card holder may dispute any charges that he or she thinks are incorrect. Otherwise,the card holder may pay a defined minimum proportion of the bill by the due date, or may choose to pay a higher amount up to the entire amount owed.The credit issuer charge interest on the amount owed if the balance is not paid in full(generally at a much higher rate than most other forms of debt).In addition, if the credit card user fail to make atleast the minimum payment by the due date,the credit issuer may impose a "late fee" and/or any other penalties on the user. To mitigate this ,some financial institutions arrange for automatic payments to be deducted from the user's bank accounts,thus avoiding such penalties as long as the card holder has sufficient funds.
The main benefit to the credit card holder is convenience.Compared to debit cards and cheques, a credit card allows small short-term loans to be quickly made to a customer who need not calculate a balance remaining before every transaction, provided the total charges do not exceed the minimum credit line for the card. Many credit cards offer rewards and benefit packages, such as offering enhanced product warranties at no cost, free loss/damage coverage on new purchases and points which may be redeemed for cash, products, airline tickets etc. The Credit cards offer enormus advantages over other methods of payment.Those card holders who use their credit cards wisely can experience major benefits. Having a credit card in your wallet means no more runnings to banks for cash, counting out change or hurriedly scribbling in a cheque book.Many credit cards can also be used in an ATM to withdraw money against the credit limit extended to the card. Ofcourse,the card issuers may charge interest on cash advances.The interest on cash advances is generally charged from the date the withdrwal is made.
Generally,eighteen is a liberating age for getting a credit card.Often, you will be approached by credit card companies to apply for a card (either by mail, telephone or in person at a store, bank or at any other place).Different credit cards offer different benefits and different requirements for application.So it is important to get credit card company's information in writing and take your own time to review it before coming to a decision.
Here under are some important points you should consider while applying for a card:
1.Is the credit card is accepted at many places?
2.Is there an annual fee? How much?
3.Do you have to pay off the entire balance each month?
4.If you don't pay off the entire balance,what is the interest rate?
5.Is there a fine for late payment? If so, what?
6.What is your credit line? How soon and how often will it be raised?
7.does the card give you any extra benefits?
Finally, it is important to manage your money deftly, especially, when you use credit card often. Pay your bills in time, set aside money for extras like vacations, exigencies or large purchases.While planning a budget you should consider your income . Now, you will be happy by having a credit card.Otherwise you will be doomed into financial doldrums.
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