What Is a Credit Card?
A credit card is a payment instrument issued by banks or financial institutions that allows you to borrow money up to a pre-approved credit limit. You can use this money for purchases and repay it later, either in full or in monthly installments.
Unlike debit cards, credit cards do not deduct money directly from your bank account at the time of purchase.
How Does a Credit Card Work?
Here’s how a credit card works step by step:
Credit Limit Assigned
The bank assigns you a maximum spending limit based on your income and credit score.Making Purchases
You can use the card for online and offline transactions.Billing Cycle
All transactions are recorded in a monthly billing cycle.Credit Card Statement
At the end of the cycle, you receive a statement showing total spending, minimum due, and due date.Repayment
You can pay:Full amount (no interest charged)
Minimum due (interest applies on remaining amount)
What Is a Credit Card Billing Cycle?
A billing cycle is usually 30 days, followed by a grace period of 15–20 days.
If you pay the full bill within the due date, no interest is charged.
Benefits of Using a Credit Card
✔ Cashless convenience
✔ Interest-free credit period
✔ Rewards, cashback & offers
✔ Emergency fund backup
✔ Improves credit score if used wisely
✔ Easy EMI conversion on large purchases
✔ Cashless convenience
✔ Interest-free credit period
✔ Rewards, cashback & offers
✔ Emergency fund backup
✔ Improves credit score if used wisely
✔ Easy EMI conversion on large purchases
Types of Credit Cards in India
Basic Credit Cards – For first-time users
Rewards Credit Cards – Earn reward points
Cashback Credit Cards – Get cashback on spending
Travel Credit Cards – Airline miles & travel benefits
Fuel Credit Cards – Fuel surcharge waiver
Business Credit Cards – For business expenses
Credit Card Charges You Should Know
Before using a credit card, understand these common charges:
Interest Rate (if bill not paid in full)
Annual / Joining Fee
Late Payment Charges
Cash Withdrawal Fee
Over-limit Charges
Always check the card’s terms and conditions
