Are Credit Cards Really Worth the Hype ?
Credit Card Description on how it works and the advantages or Disadvantages of using one. Proper utilization of Credit cards are more Worthy but Delay in Payment leads to Penalty or Interest on the Spendings Could be Costly.
Joel
3/19/20251 min read
Whats Credit Card?
Buy things now and Pay later without Liquid Cash and with some benefits such as Reward Points and Cash Back on Usage.
How Credit Cards Work?
Banks Provide a Card with Credit Limit for a Period of Time on spending of the card it Generates a statement for the period within the the prescribed Due Date called Billing Cycle Payment in full without Interest or Minimum amount with Interest as applicable.
How to Choose a Credit Card?
Considering Spending habits Pick a card that suits you like Travelers use Travel benefit Credit cards, shopaholic use cards that benefit Shopping.
How Interest Rates work on Credit cards?
Annual Percentage Rate, is the amount Charged by banks, Interest rate varies from bank to bank depending on type of card.
Example 36% APR on Balance of 1000, the monthly Interest rate would be 3% (36/12), 1000 x 3% = ₹30/- Month.
Interest is charged only if Full payment is not done by due date or monthly Payment is not done, and withdrawal of cash from credit card through ATM.
How Credit Rating is Done?
CIBIL Score known as Credit Score determine your Creditworthiness, Credit Score Ranges from 300 to 900, Higher Score Indicates Lower Credit Risk.
300 - 549 Poor
550 - 649 Fair
650 - 749 Good
750 - 900 Excellent
Conclusion
Credit Cards are as good as they look if we use them with discipline else due to Interest Rates or Penalties end up with huge Losses, the Best way to use Credit cards is by timely payment of dues within Due Date, Optimum utilization of Credit Limit, and Boost in the Credit Score (CIBIL).