Learn About a Credit Card and Ways to Apply for One

For making transactions, you generally get 4 options: net banking, mobile wallets, debit cards, and credit cards. While the first 3 make it practically available to all, they provide little to no rewards against a transaction.

On the other hand, credit cards are different than the rest as they can make almost all your payments lucrative. If you don’t know what is a credit card, then take a look at the following.

What is a credit card?

A credit card is a flexible financial tool to purchase goods and services on credit. It comes with a credit limit provided by the card issuer which you can utilise for making small to big transactions. The issuer sends you a bill every month for all the charges and payments you have made with the card.

How does a credit card work?

A typical credit card comes with the following:

1. Credit limit

The credit limit is the maximum amount that you can borrow and spend using your card.

2. Amount due

Your monthly credit card statement comes with the following amounts:

  • Total amount due – It is the total amount which you owe to the issuer.
  • Minimum amount due – The minimum amount is a specific percentage of the total amount due that can also include the interests.

You can opt to pay the minimum amount if you can’t pay the total amount due. Doing so will help you avoid finance charges.

3. Finance charges (interest)

Finance charges or interests are applicable when you fail to pay the minimum amount due within the grace period.

It is crucial to know the grace period if you are looking to understand what is credit card.

4. Grace period

The grace period is the time within which you have to pay your credit card bill. Grace periods can go up to 45 days.

5. Reward points

Credit cards provide reward points when you make a transaction. The number of points that you receive depends on various factors.

Rewards points can be redeemed in the following ways:

  • Cashback – Redeeming the reward points for cash can enable you to receive discounts on your monthly bill.
  • Travel miles – Convert the reward points into travel miles to get discounts on air tickets.
  • Gift vouchers – Redeem the rewards points for attractive gift vouchers.
  • Purchase fuel – Some credit cards provide you with the option to redeem rewards for discounts on fuel purchase.

 6. Charges

A typical credit card can come with the following charges:

  • Joining fee – Fee required when you apply for the card.
  • Annual fee – Fee needed to renew the card per year.
  • Over-limit charges – Charges applicable for crossing the credit limit.
  • Late payment fees – Fees applicable for defaulting on the minimum amount payment within the deadline.
  • Cheque bounce fee – Fees applicable if the cheque you submitted for paying the bill is dishonoured.
  • Foreign transaction fee – Fees applicable when purchasing products or services overseas.

Credit cards may also come with several other fees, as per the issuing company’s terms and conditions.

7. Benefits

It is crucial to know the benefits before you apply for a credit card. Some of the most popular benefits include:

  • Fuel surcharge waiver up to a specific limit every month.
  • Complimentary accesses to airport lounges.
  • Emergency personal loans against your credit limit.

Credit cards like the Bajaj Finserv RBL Bank SuperCard provide an interest-free emergency personal loan for up to 90 days.

  • Discounts on dining.
  • Free movie tickets or discounts on them.
  • Discounts on various retailers and websites.
  • ATM cash withdrawal.

The SuperCard also lets you withdraw cash from ATM and repay the same without any interest for up to 50 days.

Furthermore, Bajaj Finserv has pre-approved offers on these credit cards to make the procedure easier and less time-consuming. You can also avail pre-approved offers on credit cards, and several other financial products and services. Check your pre-approved offer by providing some of your few essential details.

What are the different types of credit cards?

Some of the various types of credit cards available include:

  1. Travel credit cards – For frequent flyers.
  2. Entertainment credit cards – For those who visit movie theatres often.
  3. Fuel credit cards – For people who spend more on fuel.
  4. Retail credit cards – For those frequently purchase groceries.

How can you apply for a credit card?

Here are the general steps to follow:

  • Visit the dedicated page on the company’s official website and fill up their online application form.
  • Ensure to check all your personal details you have entered.
  • Submit the necessary documents like photograph, address proof, KYC papers, etc.

Note that credit card companies require their customers to have a credit score of 750 or more for applying.

Now that you already know what is credit card and how to apply, compare your options and opt for the ideal one today.

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