Credit Card

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Credit Card
Credit card will help you during your emergencies, when you have expenses beyond your capacity. Besides, shopping with Credit card can also rewarding. You can make the most out of your expenses.

What is Credit Card?

A Credit card is a card issued by a financial institution which allows the card holders to borrow funds according to his convenience. At the time of the card issuance, the financial institution or the bank pre-set the maximum credit limit. The card holder can use the available funds at the time of his need. The credit card is issued given the condition that, the card holder will repay the borrowed fund in addition to any other agreed upon charges. You can apply for an online credit card to enjoy the facilities of the best credit card.

Credit card is one of the most popular forms of payment for good and services. As compared to other forms of consumer loans, credit card charges a higher annual percentage rates (APRs). Usually, on the unpaid amount, the interest rate is charged beginning from one month after making a purchase.

How Credit Card works?

The working of a credit card is very simple to understand. Using a credit card online for your purchase simply means, it provides you with more time to pay for your purchase. After using a credit card, you need to repay the outstanding amount at the end of every billing cycle. You can easily swipe the card at merchant stores and authenticate the transaction by entering their PIN number. For some of the credit cards, you are not required to enter the pin number. While going for online payment via your credit card, it is always advisable to make sure that the website is well secured.

Features of Credit Card

Here are some of the features of the best credit card-

  • Global Acceptance- In India, most of the credit cards issued are international cards which are accepted round the globe by different merchants.

  • Reward Points Program- Using this program, cardholders use this card to make their payment can earn reward points. Card holders can redeem the reward points after earning minimum reward points.

  • Fuel Surcharge Waiver- The best credit card offers the facility of fuel surcharge waive. This facility waives off 1% surcharge which is charged on all transactions that is carried out on petrol stations.

  • Balance Transfer- Using the balance transfer facility, card holders are able to repay the borrowed amount at a low interest rate and can save money. Under this facility, cardholders can transfer the outstanding balance of their existing credit cards issued by a bank to the credit card account of another bank.

  • EMI Conversion- The best credit card offers the facility of EMI conversion. Using this feature, card holders can convert their credit card transaction into equated monthly installments (EMI). This particular feature have different repayment options and attractive interest rates.

Types of Credit Card

Following are the types of credit card available-

  • Lifestyle Credit Cards

  • Shopping Card

  • Airline credit cards

  • Business credit card

  • Corporate Credit Cards

  • Co-branded Cards

  • Reward cards

  • Fuel Credit Cards

  • Entertainment Credit Cards

  • Dining Credit Cards

  • Golf Credit Cards

  • Utility Credit Cards

  • Travel Credit Cards

What is Secured Credit Card?

A secured credit card or free credit card is secured by fixed deposits which acts as a collateral when you open the account. The amount you deposit equals the credit limit. The deposit reduces the risk of the bank. When you pay the credit card bill on time, you will get back the fixed deposit. But in case you fail to pay, the bank will use the fixed deposit. The secured credit card or free credit card helps in improving your credit and apply for the regular or secured credit card in the later stage. Individual with poor credit history can opt for this card to rebuild their credit. When you start repaying this credit card bill on time the credit score increases. Customers with good repayment behaviour enjoys the advantage of an increase in credit limit without an additional collateral deposit. The increased credit limit adds up to the credit score.

Eligibility Criteria for Credit Card

The eligibility criteria to apply for credit card online varies for different bank and different types of credit card.

Usually, the credit card depends on the following factors-

  • Fixed source of income

  • Good credit score

  • Porpose of the credit card

  • Working as salaried, self employed business or self-employed professional

Documents Required to apply for Credit Card

Following are the set of documents which are required for credit card apply online-

ID Proof

  • PAN card

  • AADHAAR card

  • Voter ID card

  • Driving License

Address Proof

  • Rental Agreement

  • Electricity Bill

  • Telephone Bill

  • Passport

Income Proof (For Self-employed)

  • Business Continuity Proof

  • Balance Sheet or Audited Profit and Loss Statement

  • Statement of recent ITR (Income Tax Returns)

Income Proof (For Salaried)

  • Appointment letter

  • Recent Salary slip/s

  • Salary Certificate

What are Credit Card Numbers?

On every best credit card, there are 16 digits. These numbers are coded to identify the issuer and prevent any kind of fraud.

The very first digit of the credit card signifies the system-

  • 6- Discover Card

  • 5 -Master Card

  • 4- Visa Card

  • 3- Travel or Entertainment Card

The structure of the credit card number varies by the system. For ex- Carte Blanche and Diners Club starts with 38 and American Express card numbers starts with 37.

Master Card- The 2nd and the 3rd digit, the 2nd digit up to 6th digit, the 2nd digit up to 5th digit or the 2nd digit up to 4th digit is your bank number. This depends on whether the 2nd digit is 1,2,3 or other than that. After the bank number, the digits up to the 15th digit is the account number. The 16th digit is the check digit.

Visa Card- From 2nd digit up to the 6th digit is the bank number. From the 7th digit to the 15th digit or from 7th digit to the 12th digit is the account number. The 16th digit or 13th digit is the check digit.

American Express- The 3rd and 4th digit signifies the type and currency. The 5th digit up to the 11th digit is the account number. The 12th digit upto the 14th digit is the card number. The 15th digit is the check digit.

Some important terms related to Credit Card

Line of Credit

A sort of arrangement between the bank and the credit card holder which allows him to borrow a maximum amount of money. To meet any financial requirements, the card holder can use the line of credit to access fund until he doesnot exceed the maximum credit limit. While using the line of credit, customers pay interest only on the amount they use and not on the whole credit line. They can adjust their repayment method i.e, either paying minimum monthly payments or paying the entire outstanding amount at once.

Revolving Credit

Revolving Credit is a line of credit which allows the credit card holder to access the fund upto the credit limit. It is a kind of arrangement where you can withdraw loan, repay, redraw again any number of times until the arrangement ends. Under this revolving credit, the cardholder can use the credit card repeatedly. The available credit amount increases as it is repaid and decreases as it is borrowed. The cardholder repays the amount he withdraws plus the interest charged on it.

Revolving Account

Revolving account is a type of credit account where the cardholder does not pay the outstanding amount in full every month and allows him for varying credit availability. Here, the customer have to repay between the minimum amount and the full amount. When you don't pay the balance in full at the end of the monthly billing cycle, interest will be charged on the remaining balance amount. And the total amount will revolve into the next month.

Credit Card Balance

It is the amount of money that you owe to the credit card company. The credit card balance can be positive, negative or zero. It is positive if you owe money to the credit card company. It is negative, if the payment is greater than the balance. It is zero, if the balance is fully repaid. In order to avoid high interest rate and manage the credit card efficiently, you should go for zeron credit card balance. The credit card balance includes- interest charge, recent purchases, unpaid balance, annual fee, late fee or any other fees. Your each payment reduces the balance and your each purchases adds up to the balance.

Minimum Payment Amount

Minimum payment amount is a small portion of the outstanding balance. It is the minimum amount you need to pay for your credit card bill in order to avoid any kind of penalty charges. So, you need to pay atleast the minimum amount by the due date of each month after the monthly billing cycle. If you donot pay the minimum payment amount, then your credit score will be affected adversely.

Payment Due Date

When you have a balance on your online credit card, you need to do monthly payment towards the balance, This payment should be made within a certain specified date known as payment due date. If you delay your payment beyond this due date, then the credit card issuer can charge penalty and also can report a late payment to the credit bureau.

Grace Period

Grace Period is the time gap between your monthly billing cycle and your payment due date.If you make your payment within the grace period, then no interest is charged i.e, free credit card. If you fail to pay your credit card bill within the grace period, then interest will be charged on the entire outstanding amount and also on the new purchases made using the online credit card. Generally, banks grant a grace period of 20 to 60 days (varies from bank to bank) in India. Most banks in India does not grant a grace period for cash advances on your online credit card. The factors which affect the credit card grace period are- your credit card balance, the payment due date and the closing date on your credit card statement.

Credit Limit

Credit card limit is the maximum purchase limit set by bank or the credit card company on a particular credit card. It is the maximum amount that a cardholder can access within a monthly billing cycle. The credit limit is determined depending on the factors like- monthly income, credit score, purchase habits, loan repayment history, and other criterias. Credit limit varies for different customers. If your monthly obligation (through bank account statement) is less, then you can expect a high credit card limit. But if your monthly expense is high, then you should expect a low credit card limit (doubting your ability to spend and pay).

There are 2 types of credit card limit.

  • Total Credit Card Limit- It is the maximum credit limit that you can avail on your credit card.

  • Available Credit Card Limit- It is the due amount which is the difference between the total credit card limit and the amound paid using the credit card.

Fees charged on the Credit Card

Following are the different types of fees that are charged on the best credit card-

  • Annual Fees- After you have been approved for the credit card online, an annual fee is charged as the cost of owning the credit card. On an annual basis, this fee is added to your bill. But best credit cards do not charge any annual fees.

  • Late Fees- You are charged a late fee, if you fail to make your minimum due payment in time. So, it is advisable to pay your bill on time or mail your cheque before the due date.

  • Other fees- Credit card companies often charge a range of other fees which includes- returned cheques or charges for exceeding the credit limit.

EMI on Credit Card

Credit cardholder can choose to pay monthly installments and the repayment period for the EMI (Equated Monthly Instalment) to pay for the credit card bills. Some banks offer 0% interest on an instalment payment. This means the cardholder have to pay the principal amount through monthly installments within the selected re-payment period and no interest will be charged.

Also, some banks charge a low interest rate on the EMI of the credit card. In this case, the cardholder has to pay the EMI which includes the principal amount and the interest rate, until they clear off the debt.

Interest Rate charged on Credit Card

The interest rate is computed as the Annual Percentage Rate (APR) which depends on the credit card type. Customer’s credit score determines the APR. In case the monthly outstanding amount has not been repaid by the cardholder, then banks charge a certain interest rate % on the borrowed amount.

Customers who are comfortable in regular monthly repayments can opt for a credit card with travel loyalty programs and reward programs, which have a higher APR. While customers who wants payment flexibility can opt for the credit card with low APR. Credit cardholders enjoys an additional feature of interest free period from 20 to 50 days, offered by banks.

Key points to remember for new Credit Card User

In order to enjoy the facilities of best credit cards, here are some key points to remember for a new credit card user-

  • To get the complete information on credit card, how to apply online credit card, the interest charges, terms of agreement and other fees, you need to read all the terms and conditions carefully.

  • Try not to buy the expensive things which you cannot afford, even after having easy access to credit.

  • In case of any misuse of your online credit card, you should always keep the details of your card and the card issuer’s number with you.

  • Always pay your credit card bills in time. Any delayed payment will affect your credit score adversely.

  • To improve your credit score, try to spend less. Always try not to spend more than 50% of the credit limit on your credit card.

  • You should keep a track of your credit card sales slips to compare with your monthly credit card statement. Any kind of discrepancies should be reported, as they can be reversed.

Benefits of Credit Card

In our discussion, we have explained credit card apply, best credit cards, free credit cards, apply credit card online. Now, we will discuss about the benefits of credit card-

  • Improves credit score

  • Waive fees for international payments

  • Debt consolidation and saves money on the existing balance

  • Interest free days to pay off your credit card bill

  • Safer than carrying liquid cash

  • Meets any kind of emergency

  • Complimentary extras

  • Add-on cards for family members

  • Cashback benefit


From the above discussion of credit card, we came to know about the credit card details. We got a broader idea on types of credit card, the eligibility criteria and documents required for credit card. Using credit card for your online purchases and repaying your credit card bill on time helps to improve your credit history. Also, credit card has reduced the risk of carrying liquid cash and make your payment risk-free and hassle free.