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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
29 JUNE, 2022
Credit card spending online was almost Rs. 30,000 crores higher in March than at point-of-sale swipes, suggesting that people are increasingly preferring e-commerce purchases.
For the past several years, banking and fintech companies have been utilizing artificial intelligence (AI) to strengthen fraud protection on credit and debit cards, evaluate defaulter tendencies, warn customers against overspending, and even help them determine their expenditure.
Some companies are increasingly utilizing predictive analytics to improve how credit and debit cards are used in real-time.
Further, the Reserve Bank of India (RBI) has issued guidelines for issuing credit and debit cards to empower cardholders and prevent issuer misbehavior.
In this blog, we will look at some credit card features that many people are unaware of.
Who can get a credit card, and what are credit cards?
A credit card is a card that provides the cardholder with access to a revolving credit line, also known as a line of credit. This means they can use the card to borrow money from the bank whenever required and repay it monthly.
Only if a person meets the following credit card eligibility requirements will they receive a credit card.
Various lenders examine the person’s financial history and credit history before offering them the opportunity to purchase a credit card through a simple process.
Further, the documents required to avail of a credit card are Identity, age, address, income proof, and PAN card.
Credit Card Features
A few features of credit cards are:
1. Exclusive offers and discounts
One of the most significant benefits of owning a credit card is breaking down huge expenses into smaller, more manageable instalments. Credit cards have other advantages as well.
Some of the best cards also provide exclusive discounts, incentives, and access only available to members. Certain credit cards, for example, provide access to airport lounges and free memberships and subscriptions to specific brands.
Further, with cashback and bonuses, purchasing a credit card can help save money.
2. Customised benefits
Certain credit card companies provide various card alternatives so that one can pick the one that best fits their needs.
3. Reversing fraudulent transactions
A cardholder’s money is immediately taken from their account if their Debit card is stolen or forged. It might be difficult to recover money once it has been lost.
However, if they suspect credit card fraud, they can notify their bank, and their card will be blocked immediately. Most credit card providers offer zero liability if an unauthorised transaction occurs due to their carelessness.
4. Improves credit score
Maintaining a decent CIBIL score is a vital requirement because it influences one’s loan eligibility. One can immediately improve their credit score by paying their credit card payments on time and fully.
5. EMI payments
A credit card may be used to purchase flagship things at reasonable EMIs, which is one of the most notable advantages of credit cards. Users can repay these over the period that they want.
6. Loan during emergencies
In an emergency, a credit card facility can be used to obtain a personal loan.
7. Cash withdrawal
An additional feature of a credit card over a debit card is that they allow you to take cash in advance from ATMs and reimburse the money when the payment is due.
8. Payment security
Credit cards are a digital payment system that allows for making secure payments. Users do not have to be anxious because of multi-factor authentication and in-hand security measures.
Things to keep in mind when applying for a credit card
Before applying for a credit card, consider the following:
1. Read all the terms and conditions
Before purchasing a credit card, individuals should acquaint themselves with all terms and restrictions. They need to read all of the documents thoroughly to ensure that they understand everything.
2. Additional expenses
Using a credit card entails a host of extra fees. Users may be frustrated and abused later if they are unaware of these credit card costs before purchasing the card. As a result, they can become familiar with all of the expenses they may face in the future.
3. Maintain credit score
Credit cards are one of the most beneficial financial tools for improving credit scores. Using a credit card effectively will help enhance, if not maintain, the credit card credit score. Make every effort to pay all the bills before the deadlines.
4. Interest-free period
The interest-free period, which spans from the transaction date to the repayment due date, is offered by most credit cards.
Users are not liable to pay anything if they can pay off the entire balance on their credit card within the interest-free period. They will, however, be responsible for paying the corresponding interest fee after the payment due date, which is usually high.
5. Minimum payment
Cardholders are obliged to clear either the minimum payment or the entire amount based on their credit card activities in a credit card. At any point, they have the option of paying more than the required minimum payment.
6. Late payment fee
A late payment fee will be applied if the cardholder does not refund the billed amount by the due date. A fixed amount or a percentage of the billed amount may be charged as a late payment fee.
One can request a waiver of the late payment fee from the credit card company, but it may only be granted once as a gesture of goodwill or not at all, depending on the credit card issuer.
To summarise, getting a credit card that fulfils all of your requirements can be challenging. Nevertheless, a card that substantially incentivises your massive spending segments while sticking within your budget and providing a wide range of valuable advantages and privileges should suffice.
However, regardless of which card you choose, make sure you spend wisely and within your means to prevent interest charges and a lowered credit score.
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