Are you planning to get a credit card? Or have you already got one, but have no idea what to do with it? You have come to the right place. So let’s start with the basics. Credit cards have been around for a long time and they are a very convenient means to make payment. As the name suggests, credit cards allow you to make payments on credit with zero interest. However, if you don’t pay the monthly credit card bill within the stipulated period, you will be charged a high interest amount. Listed below are the important things you need to know about credit cards.
Shop Around and Earn Rewards
By using credit cards on a frequent basis, you can accumulate a lot of reward points. These reward points can be accumulated and redeemed for your future purchases. Most of the banks offer attractive rewards on credit card usage.
Interest Rates Are Quite High
If you fail to pay back the credit bills within the credit period, you will be liable to pay a heavy interest. Credit Card interest rates start from 16% which is quite high. In order to avoid such heavy interest, make sure to pay your credit card bills on time.
Minimum Repayment Amount
In case you are unable to pay the entire amount due, you can pay the minimum repayment amount in order to avoid the heavy interest. The minimum repayment amount is usually 5% of the amount due. However, the minimum repayment varies from bank to bank. So make sure you know the minimum repayment amount before choosing a credit card. It is best to avoid minimum repayment, as it will take you longer to clear your debt.
Credit Card Eligibility
Any person above the age of 18 years is eligible for a credit card. However, if you have no source of income, you might need a qualified co-signer to get the card approved for you. Banks usually give out credit cards to people with a steady income.
Different Types of Credit Cards
There are two types of credit cards, secured credit card, and unsecured credit card. If you want a secured credit card, you will need to make a fixed deposit with the issuing bank. Secured credit cards are a great way to improve your credit score. On the other hand, unsecured credit cards do not require any deposit.
Improve Credit Score
By paying your credit card bills on time, you can improve your credit score significantly. With a high credit score, you can get loans from a bank at a low-interest rate. These days, all banks and financial institutions check your credit score before approving a home loan or any other loan.
Enjoy Lots of Perks
Credit cards entail a number of amazing perks. Most credit cards offer perks like frequent flyer miles, roadside assistance and rewards points on every purchase.