Credit Card Meaning: A credit card is use to make purchases, just like a debit card. However, unlike a debit card, a credit card allows you to make purchases with borrowed funds rather than funds from your bank account. The key to using a credit card responsibly is to pay off your balance in full each month to avoid going into debt and incurring interest charges.
Definition of a Credit Card
Means of A credit card or you can say credit card meaning is a small plastic or metal card issue by a financial institution. It allows you to purchase items by borrowing money up to a certain amount. A credit card allows you to access a credit limit set by the credit card company. Your credit limit determines the maximum amount you can borrow. Instead of giving you the full amount in cash, the credit card company lets you use as much of your credit limit as you want at any time. You can borrow again once you’ve paid off your previous loan.
How do credit cards work?
Credit cards, like debit cards, are issue by a bank or credit union and linked to an account. When you present your credit card, it initiates a transaction that appears to be a debit transaction: amount requested. You have been given a card. The transaction has concluded. However, behind the scenes, the procedure is quite different.
When you pay with a debit card, the total is deduct from an already earned amount. If you spend close to zero, you’ll have to put more money in to continue using your card, or you’ll be charged an overdraft fee.
A credit card, on the other hand, lets you spend money you haven’t yet earn – up to a certain limit known as your credit limit. When you make a purchase, your bank puts a hold on the funds, knowing that you’ll pay it back in full when your balance is due. And that you will be penalise with interest if you do not.
How to get a credit card?
Most credit cards can be apply for online in a few simple steps, but it’s critical to understand what’s include in an online card application. To make the process go more smoothly, gather all of the information you’ll need before you start. You can free credit card apply in any bank but Bajaj Finserv is the only where you get instant approval online.
Qualifying for a Credit Card
Your credit history and repayment capacity are the two most important factors in determining credit card eligibility. The card-issuing bank will assess your creditworthiness before granting you credit.
The bank would typically look for the following parameters:
- A minimum of six months of regular credit history and a credit score of at least 700 are required for Indian nationals with legitimate evidence of residency.
- It is necessary to have a monthly income of INR 20,000.
- A minimum of 21 years old is required.
- Your current income and credit utilisation patterns
How to Get a Credit Card in India?
- Determine the type of credit card you require: Choose your credit card based on your needs- if you travel frequently, a travel credit card is essential. There is an entertainment credit card to get offers on movie tickets, and the list goes on.
- Before Applying for a Credit Card, Make Sure You Meet the Eligibility Requirements: Before applying for a credit card, make a list of the requirements. We have already discussed the factors that contribute to credit card approval.
- Prepare the documents: After confirming your eligibility for a credit card, you must ensure that you have all of the required documents before applying for a credit card.
- A proof of income in the form of IT returns
- Payslips
- Bank account statements
4. Complete the application: After you’ve decided on the card you want and checked that you have all of the necessary documents, the next step is to choose a bank and fill out an application form. You can do it both online and offline.
