.webp "What are Credit Cards: Features, Advantages, Eligibility Conditions") |
| What are Credit Cards: Features, Advantages, Eligibility Conditions |
There are times when you need additional funds beyond what you already have in your pocket. To meet such needs, various financial institutions offer you the option to borrow money using a credit card.
What is a credit card, its features, and more about the benefits and drawbacks of a credit card, keep reading.
What is a credit card?
A credit card is essentially a financial tool that allows you to borrow money from your bank to fulfill your necessary expenses and also provides you with the convenience of paying back the amount later. A credit card provides you with a line of credit that can be used for making necessary payments. However, this amount should be repaid to the bank by a predetermined date, as agreed upon by the bank and the cardholder.
Credit Card: Eligibility Criteria
You are eligible to apply for a credit card when you meet the following credit card eligibility criteria:
- You are an Indian citizen aged 18 years or older.
- You are either a salaried professional or self-employed.
- You have a steady source of income (specific conditions may vary from bank to bank).
- You have a good credit score (700 or above).
Various banks or financial institutions assess your financial background and review your credit history. Based on this, they offer you the option to purchase a credit card following a simple process. These cards are called pre-approved credit cards.
Additionally, there are various tools like credit card eligibility checkers that assist you in checking your credit card eligibility online within a few minutes!
Credit Card: Required Documents
In addition to the above credit card eligibility criteria, you need the following documents to apply for a credit card:
- ID Proof (PAN card, Aadhaar card, Passport, or Voter ID)
- Address Proof (Aadhaar card, electricity bill, or telephone bill)
- Income Proof (Salary certificate, salary slips, employment letter, IT returns, etc.)
Features of a Credit Card
Here are some important features of a credit card that you should be aware of:
- A credit card comes with an approved credit limit by the bank. This limit defines the amount the credit cardholder can spend using that card.
- The credit amount must be repaid to the bank by a specified date, usually 30 days after the purchase.
- The credit card limit is determined by your credit score and credit history.
- A credit card appears as a thin, rectangular, plastic, or metal card that can be swiped for payment.
- Each credit card has a grace period, which is the time given to the cardholder to repay the borrowed amount to the bank. Within this grace period, usually between 15-20 days between the statement generation date and the due date, you have to pay back the amount you borrowed from your credit card. So, you typically have around 45-50 days to make payments using your credit card.
Benefits of Using a Credit Card
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| Benefits of Using a Credit Card |
Are you confused about whether to buy a credit card? Here are some reasons you should definitely consider moving forward:
Building a Good Credit History: A credit card is a great way to build a good credit history for yourself and increase your purchasing power.
Increased Flexibility during Payments: Using a credit card gives you more flexibility during payments.
Helps Establish a Good Financial History: Having a good financial history will help you establish a good credit score, making you eligible for benefits like loans and other financial products.
Accumulation of Reward Points: Since you often use a credit card, you can accumulate points on each purchase. These points can be redeemed later for travel or payment on other e-commerce platforms.
Considered a Safer Method of Financial Transactions: Compared to other payment methods, using a credit card is considered a safer way to conduct financial transactions.
Ability to Convert Credit Purchases into EMIs: If needed, you can convert your credit purchases into EMIs and gradually pay off the billed amount.
Drawbacks of Using a Credit Card
Below are some reasons why people think twice before getting a credit card:
- Interest Payments and Charges: The amount spent on a credit card comes with the condition of repaying it to the bank along with interest charges.
- High Interest Rates for Late Payments: Failing to repay your credit on time can lead to bearing high credit card interest rates, which can ultimately lead to drowning in debt.
- Negative Impact on Credit Score: Missing credit payments or even paying them off maximally can lead to a decrease in your credit score.
HDFC Bank Co-Branded Credit Cards
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| HDFC Bank |
A leader in India's digital ecosystem for consumers and businesses, Paytm, has launched a series of consumer credit cards in partnership with HDFC Bank, India's largest private sector bank.
The primary offering of the 'Paytm HDFC Card' is its unlimited benefits. Paytm HDFC Credit Card users can receive cashback of up to 5% on Paytm Movies, Travel, and Shopping, and up to 3% cashback on categories widely used such as mobile recharges on the Paytm app and all types of bill payments. For all other retail merchants. For pendings, users get up to 1% cashback.
As a 'Welcome Benefit,' users get a joining bonus in the form of cashback and free Paytm First membership with benefits worth Rs. 75,000. Additionally, the following rewards are available on the Paytm app:
- Up to 5% cashback on Paytm Movies and Mini Apps.
- Up to 2% cashback on all Paytm spends, including bill payments and recharges.
- Up to 1% cashback on all other retail spends.
HDFC Online Banking Platform offers the following rewards:
- Up to 5% cashback on Amazon, Flipkart, Apple, and MakeMyTrip through HDFC SmartBuy.
- No cost EMI.
- Up to 5% cashback on utility bills on SmartPay.
- Cashback in the form of rupees. 3,000 on PayZapp.
- In addition to these, various milestones and lifestyle benefits and 8 free airport lounge accesses are also offered for spending Rs. 50,000 every quarter.
Which Credit Card is Right for You?
Financial institutions offer various types of credit cards to meet different needs of people. Based on your purchasing objectives, you can choose from the list of various types of credit cards provided:
- For Travel Enthusiasts: Credit cards for travel are those that cater to all your travel needs from airline bookings to hotels and cabs. You can earn reward points on each purchase and use them for more bookings in the future!
- For Your Transportation Needs: Fuel credit cards are there to reduce your transportation costs. These cards help you avail fuel surcharge waivers, enabling you to save enough on your fuel expenses.
- For Extra Savings: Reward credit cards offer hefty rewards on your spending. You can earn bonus points on each purchase and redeem them for discounts on your future purchases.
- For Shoppers: Shopping credit cards allow you to shop at various partner stores, whether online or offline. This card provides you with cashback, discount vouchers, and many other discounts.
- For Additional Savings: Secure credit cards' benefit can be taken in the form of changing the tenure of the deposit and taking advantage of attractive interest rates. Using this card will help you build a better credit history and increase your credit score.