Credit Card : Overview

Credit Card is generally a plastic card issued by the bank or financial institute to its customer where customer uses this card to make purchases or goods or services at the outlets or shops where this card is accepted by the seller in lieu of cash. The seller is assured of the enough credit of the customer to sell the goods or services to him and it is the responsibility of the card holder to settle the payment with the card issuing institution within the stipulated time frame and with or without the rate of interest applied as the case may be.

Credit Card is safer than carrying cash and the cardholders are offered credit so they can ‘Buy Now and Pay Later’. Credit Card is also known as ‘Plastic Money’.

Credit Cards have different credit limits. These credit limits depend upon the financial status of the applicant and these limits keep on changing based upon the usage and repayment records. A person can obtain more than one credit cards from different banks and institutes subject to his credit history and financial status.

The credit card is issued to the applicant after verifying his/her credit history, financial status, residential status and other general information. The transaction made using credit cards are liable to be charged with interest. The rate of interest is a flexible issue and depends upon the policies or rules of the issuing institution.

The credit cards are acceptable world over and hence the card holder can use is across the globe subject to the transactions performed within the limit.

The credit card users get lot of schemes and discounts as a part of promotional or business development practices performed by various issuing institutes. In modern trend more and more people have started using credit cards by replacing the cash purchase. The cardholders can also withdraw cash from ATMs using credit cards.

Credit Card can be the cheapest source of finance if used smartly. The payment made by credit card immediately after the billing cycle date then the cardholder may get an interest free duration of 40-50 days. Besides most of all the credit card issuing companies offer the Balance Transfer facility to the customers. This facility can be used to transfer the outstanding of one credit card to another credit card at lower rate of interest even at 0% for first three months of transfer. These features of credit card make this the cheapest source of short term finance.