An indispensable part of life for many Indians, the credit card has become the source of easy “cash on hand”, and comfortable and convenient purchasing power. With myriad benefits that come in tandem with responsible use, your credit card can be your lifesaver in times of need and emergencies.
The Reserve Bank of India has brought about many initiatives that encourage banks to boost credit card options for holders, and these include lower interest rates and fees, plus an additional “grace period” of three days above the due date to meet timely bill payments. With over 55 million credit card users in India, many have turned to credit cards because of their clear advantages of use.
Most of the cardholders favor EMI facilities that they afford. Nonetheless, it’s vital that users are in the know about certain credit card facts like minimum due credit card meaning, and finance charges among others.
During the lockdown forced by the pandemic in 2020, several new credit card users emerged. These new applicants came from large metros as well as semi-urban Indian cities, realizing that credit cards are the tech-savvy way to pay, letting users pay bills and make essential purchases. Besides this, they afford the contactless payment, which became the need of the hour.
Best Credit Card Facts and Benefits
If you are new to credit card use, you will likely need some understanding of credit card facts. You may know how cards work, but you must be aware of terms like the billing date definition, what the minimum amount due signifies, etc.
When you want the “best” credit card, you typically have to select one that suits your individual needs. Nowadays, you get different types, such as fuel credit cards that carry reward points and surcharge waivers for people who use cards for fuel-related spending.
There are corporate credit cards that come with high cash limits for corporate and business use, linked with discounts in hotel rates. The following will help you use your credit card better:
- Credit or Cash Limit – Each card will have a different credit/cash limit over which you cannot spend. Exceeding this limit will incur charges/fees.
- “Minimum Due” Credit Card Meaning – Credit cards afford cardholders a credit line, permitting cashless purchases for a period of time. This is considered the billing duration, and the interest-free credit period you can avail of to spend. Called the billing cycle, at the end of which a statement will be generated, this statement will effectively act as your bill. The billing date definition is, therefore, the date of generation of the statement/bill.
- On the statement, you will see a payment due date by which you must settle your total bill. There is also a “minimum due” term, which is the minimum amount you must pay to maintain your card. Nonetheless, the balance (unpaid) will carry forward onto your next bill, and heavy interest may be charged. In effect, if you only pay the minimum due amount, you will be in debt to the card issuer.
- Grace Period – A grace period is extended to make it easier to pay bills in a timely manner, which is 3 days after the bill due date. This gives you extra time to pay your dues.
- Interest/Late Fees/Penalty – In case you default on your bill payment or pay the “minimum (least) due”, interest will be charged per day on the outstanding amount till it’s paid, plus penalties will be charged.
It’s better for you not to default on credit card payments, and know your billing cycle, so you may put off expensive purchases till the next cycle, as you will have more time to pay. A good credit card that offers a meager interest rate of 1.16% per month, and loans for up to 90 days is the Bajaj Finserv RBL Bank SuperCard.
You can pay for your purchases in easy EMIs that make your payments affordable. You also earn reward points that can be redeemed for cash later, and this is true of several credit cards.
The main benefit of using credit cards is the fact that they offer ready money for spending any time. Credit cards also act as ATM cards during emergencies, but any transactions done with credit cards, however tempting, are charged. Financial charges are applied on many transactions, and if you don’t pay bills on time, you may end up spending instead of saving.