Why is credit card usage complained about by many? What are the common pitfalls while using credit cards? How are credit card purchases charged, and what is the billing cycle? What is the optimum payment cycle?
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From India, Pune
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Please reply.
Thank you.
From India, Pune
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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 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.
From India, Ahmadabad
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3A 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 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.
From India, Ahmadabad
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Hi S_K,
Without financial discipline, credit cards can become very hard to manage. The reason why credit card usage is criticized is that with a credit card in your pocket, a purchase that you would otherwise postpone due to a lack of financial resources becomes tempting to make. The interest rates on credit card purchases are very high - in India, it's 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, no interest is charged if the entire amount is repaid within 40-45 days; otherwise, the interest payment begins. 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 principal.
It is better to use a 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.
From India, Bangalore
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Without financial discipline, credit cards can become very hard to manage. The reason why credit card usage is criticized is that with a credit card in your pocket, a purchase that you would otherwise postpone due to a lack of financial resources becomes tempting to make. The interest rates on credit card purchases are very high - in India, it's 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, no interest is charged if the entire amount is repaid within 40-45 days; otherwise, the interest payment begins. 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 principal.
It is better to use a 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.
From India, Bangalore
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