Introduction to Credit Cards

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A very popular product offered by all Banks is Credit Cards. As the name suggests, it is a facility offered by Banks as a card. The limit offered to customers is based on their salaries or business income and Bank charges interest on the outstanding amount incase the complete outstanding is not paid on or before the due date.

Credit Cards are very popular across the globe as customers like to spend the money which they do not own and some customer get into the habit of not paying the complete outstanding on the credit card on or before due date. Once the payment is not received by the Bank on the due date, interest is charged to customers and is added to the existing outstanding from the date of purchase. For instance if a customers statement date is first of every month and he made a purchase on 2nd of that month, he will not be required to pay that amount till the amount reflects on his outstanding statements. This means that the statement generated on the 1st of next month will reflect this transaction and he will have to pay approximately on the 15th of the second month.

The customers who understand this logic gets an interest free period of upto 45 days from the date of purchase as in the example cited above, the transaction was done after the statement date and payment was made on the due date.

Many features are offered under Credit Cards such as Instant Money, Credit Card Cheque, Balance Transfer etc.

A word of caution for new Credit Card customers is to never withdraw cash using their Credit Card as Banks start charging a very amount of interest from day one and this transaction will not be settled by the Bank till the complete outstanding is settled. So if a person does a cash withdrawal and later does some retail transactions, payment made towards the cash (assumed by the customer) is actually allocated to retail transactions and cash stands outstanding and interest is charged till the complete credit card outstanding is settled.