Credit Card

Why is credit card usage complained by many?

What are the common ptifalls while using Credit Card?

How are credit card purchases charged and how is the billing cycle?

What is the optimum payment cycle?

Please reply

Thank you

A credit card is part of a system of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services.The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.
A credit card is different from a charge card, where a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers to 'revolve' their balance, at the cost of having interest charged. Most credit cards are issued by local banks or credit unions, and are the shape and size specified by the ISO/IEC 7810 standard as ID-1.
Credit cards are issued after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card.

Hi S_K,

Without financial discipline, Credit cards can become very hard to manage. The reason why credit cards usage is complained is that with a credit card in the pocket, a purchase that you would otherwise postpone due to lack of financial resources becomes tempting to purchase. The interest rates are very high on a credit card purchase - in India its between 1.9% to 2.5% monthly.

Each issuer has slightly different payment cycles. Usually when you purchase goods and services using your credit card, there is no interest charged if the entire amount is repaid within 40-45 days, else the interest payment starts. All payments made are first adjusted towards the Interest and Penal Interest payments and only after these adjustments are made, is the balance payment adjusted towards the principle.

It is better to use Credit card for convenience and not CREDIT. If you use the Credit card, pay the outstanding amount within 40-45 days and avoid getting into the Interest payment cycle.

Hope this helps.