Overview
Q. When should I avoid using a cc?
A. You shouldn't use a cc, if you are sure that you won't be able to repay the sum. It is better to borrow from a friend or family member instead. Beware they are the most expensive type of loan, if not paid within the due date.
Q. What if I do not wish to pay the credit card dues at all?
A. If you do not pay the credit card dues delibrately, it would impact your credit history and your credit worthiness. Moreover, the banks would report this information to the statutory or legal credit bureaus, e.g. CIBIL etc. Thus, it would decrease your creditworthiness. It would also cause problems in future when you would apply for any type of loan. I have also heard that people with delinquency record do not get the visa of a few countries.
If you are suffering from a financial crisis, and do not have cash, talk to your bank for settlement. Although, it would impact your credit history, the outstanding amount would not increase after the settlement.
It is an eloctromagnetic plastic card issued by banks to the eligible applicants. It is a perpetual short term unsecured consumer credit,i.e. loan with a preset maximum credit limit. The card can be used to make online and electronic payments while shopping online or offline at physical stores which have the charge machine aka Point of Sale(POS).
Q. Who are eligible?
A. Any individual who has stable or sustainable source of income may apply. You need to have a minimum regular income (around Rs15000pm). You should not have defaulted repaying any other loan etc. in the past.
Q. What documents are needed?
A. You need to have a valid proof of identity and that of address. You must have the latest Income Tax Returns(ITR) or income proof, e.g. salary slip or Form 16 etc.
Q. Does every applicant get a credit card?
A. No. The banks issue a credit card after due verification of the application, and assessment of the credit worthiness and risk-factor of the applicant. The area you live in is also important. Banks do not issue cards to those living beyond their area of operation or those living in the so-called negative profile area.
Q. How long does it take to get the card issued?
A. Banks claim to process an application within 21 days.
Q. What are the benefits of using a credit card?
A. If you use a credit card (cc) instead of cash or a debit card, your defer the cash outflow for 20 to 50 days. Thus if you have cash, you can earn interest on your bank balance or can use it where a cash payment is indispensable.
If you do not have cash, you may still meet your unavoidable expenses, and repay the cc dues as you earn before the due date.
Q. When do I need to pay the cc dues?
A. You need to pay the total amount due (TAD) before the due date, i. e. 20 days after the statement generation date.
Q. When is the statement generated?
A. It is done on a fixed date every month.
Q. Can I pay less than the TAD?
A. Yes, you may pay the minimum amount due (MAD) which is normally 5% of the TAD. Thus, you won't have to pay the late fine. But you would have to pay the finance charge, i. e. interest on the outstanding amount from the date of transaction till the day of repayment.
Q. What is the rate of interest?
A. It's around 3%pm depending on the card-type you received.
Q. Are there other fees or charges?
A. Some banks issue life time free cc, while others charge joining fee, annual fee, etc.
Q.Can I pay any amount?
A. Yes, you may. But avoid paying more than TAD as you won't earn any return on the overpayment.
Q. Can I pay utility bills and recharge online.
A. Yes. You can also set up your recurring bills for auto-payment. Some banks may charge a nominal fee, while others don't , and also give you cash-back.
Q. What are the other benefits?
A. You get additional cash-back or discounts when you use a cc instead of cash or debit card. You also get the exclusive EMI offers which isn't available in case of cash or debit card payments.
Moreover, you won't have to suffer from the change-problem as you can pay any amount with your cc.
You also get reward points for using a cc. You can redeem the accumulated points for cash or a product or shopping vouchers.
Sometimes they offer 2-4 months of interest free payment holiday, i. e. you don't need to pay every month, but at the expiry of the holiday period.
Q. Can I withdraw cash at an ATM?
A. Yes, you may. Your cash limit is normally around 20% of your credit limit. But you don't get any interest free credit period. Moreover, there are cash advance charges of around Rs200-300. It is not advisable to withdraw cash unless indispensable.
Q. Can I use it for IVR(interactive voice response) transactions? If yes, how?
A. You need to generate a OTP(one time password) for doing an IVR transaction. You may generate the OTP by sending a text message or calling the bank's number or through your net-banking facility. Once you get your OTP, you need to call the IVR of the target merchant and complete the verification through OTP.
Q. Can I use it while travelling abroad or online for doing transactions in foreign currency?
A. Yes, you may. however there are foreign currency markup charges which is around 3.5 %.
Q. What is the conversion rate for foreign currency transactions?
A. Conversion is done at the rate of prevailing official conversion rate as on the date of settlement.
Q. Is it good for the economy? If yes, how?
A. It checks the use of black money and thus checks the leakage in tax collection, and tax evasion. Moreover, you get the genuine products as most of these merchants would sell products with bar-code which cannot be faked.
Q. How can I repay the cc dues?
A. You can pay with a cheque, through NEFT/RTGS/IMPS, or on billdesk with net banking or a debit card. You can pay cash too, but there are cash payment charges (around Rs100+service tax). You cannot use a cc to pay another cc due.
Q. Are there any risk?
A. You need to treat it as cash. However, if you lose it, none can use it unless they know the PIN too. So, never disclose your PIN to anyone, and change it regularly.
Scrutinize the cc statement every month. Although there are rare chances of wrong billing, an online fraud or misuse cannot be ruled out. If there is a fraud or misuse, report it to the bank and the law enforcement agencies.
Never forget to pay the TAD or at least the MAD as you'd have to bear the late fine or finance charges.
Even if you dispute a transaction etc., it is advisable to pay the dues in full, and wait for the resolution. If you are right, you will get the money back, and your credit history would remain intact.
Q. How much is the late fee?
A. It may be at least around Rs400 and at most Rs700!
Q. How can I increase the credit limit?
A. If your income rises, you may apply for increase in the credit limit. Many a times, the banks increase the credit limit on the basis of your usage and repayment history. So, if your usage is fairly high, and you never fail to repay, your credit limit is likely to increase.
Q. Can I give it to friends or family members?
A. No, it would be considered as misuse; for none can sign the charge slip but you; and you are not supposed to share the PIN.
However, you may apply for a supplementary cc for a family member, and you may decide the credit limit that they would enjoy.
If you do not have cash, you may still meet your unavoidable expenses, and repay the cc dues as you earn before the due date.
Q. When do I need to pay the cc dues?
A. You need to pay the total amount due (TAD) before the due date, i. e. 20 days after the statement generation date.
Q. When is the statement generated?
A. It is done on a fixed date every month.
Q. Can I pay less than the TAD?
A. Yes, you may pay the minimum amount due (MAD) which is normally 5% of the TAD. Thus, you won't have to pay the late fine. But you would have to pay the finance charge, i. e. interest on the outstanding amount from the date of transaction till the day of repayment.
Q. What is the rate of interest?
A. It's around 3%pm depending on the card-type you received.
Q. Are there other fees or charges?
A. Some banks issue life time free cc, while others charge joining fee, annual fee, etc.
Q.Can I pay any amount?
A. Yes, you may. But avoid paying more than TAD as you won't earn any return on the overpayment.
Q. Can I pay utility bills and recharge online.
A. Yes. You can also set up your recurring bills for auto-payment. Some banks may charge a nominal fee, while others don't , and also give you cash-back.
Q. What are the other benefits?
A. You get additional cash-back or discounts when you use a cc instead of cash or debit card. You also get the exclusive EMI offers which isn't available in case of cash or debit card payments.
Moreover, you won't have to suffer from the change-problem as you can pay any amount with your cc.
You also get reward points for using a cc. You can redeem the accumulated points for cash or a product or shopping vouchers.
Sometimes they offer 2-4 months of interest free payment holiday, i. e. you don't need to pay every month, but at the expiry of the holiday period.
Q. Can I withdraw cash at an ATM?
A. Yes, you may. Your cash limit is normally around 20% of your credit limit. But you don't get any interest free credit period. Moreover, there are cash advance charges of around Rs200-300. It is not advisable to withdraw cash unless indispensable.
Q. Can I use it for IVR(interactive voice response) transactions? If yes, how?
A. You need to generate a OTP(one time password) for doing an IVR transaction. You may generate the OTP by sending a text message or calling the bank's number or through your net-banking facility. Once you get your OTP, you need to call the IVR of the target merchant and complete the verification through OTP.
Q. Can I use it while travelling abroad or online for doing transactions in foreign currency?
A. Yes, you may. however there are foreign currency markup charges which is around 3.5 %.
Q. What is the conversion rate for foreign currency transactions?
A. Conversion is done at the rate of prevailing official conversion rate as on the date of settlement.
Q. Is it good for the economy? If yes, how?
A. It checks the use of black money and thus checks the leakage in tax collection, and tax evasion. Moreover, you get the genuine products as most of these merchants would sell products with bar-code which cannot be faked.
Q. How can I repay the cc dues?
A. You can pay with a cheque, through NEFT/RTGS/IMPS, or on billdesk with net banking or a debit card. You can pay cash too, but there are cash payment charges (around Rs100+service tax). You cannot use a cc to pay another cc due.
Q. Are there any risk?
A. You need to treat it as cash. However, if you lose it, none can use it unless they know the PIN too. So, never disclose your PIN to anyone, and change it regularly.
Scrutinize the cc statement every month. Although there are rare chances of wrong billing, an online fraud or misuse cannot be ruled out. If there is a fraud or misuse, report it to the bank and the law enforcement agencies.
Never forget to pay the TAD or at least the MAD as you'd have to bear the late fine or finance charges.
Even if you dispute a transaction etc., it is advisable to pay the dues in full, and wait for the resolution. If you are right, you will get the money back, and your credit history would remain intact.
Q. How much is the late fee?
A. It may be at least around Rs400 and at most Rs700!
Q. How can I increase the credit limit?
A. If your income rises, you may apply for increase in the credit limit. Many a times, the banks increase the credit limit on the basis of your usage and repayment history. So, if your usage is fairly high, and you never fail to repay, your credit limit is likely to increase.
Q. Can I give it to friends or family members?
A. No, it would be considered as misuse; for none can sign the charge slip but you; and you are not supposed to share the PIN.
However, you may apply for a supplementary cc for a family member, and you may decide the credit limit that they would enjoy.
Q. When should I avoid using a cc?
A. You shouldn't use a cc, if you are sure that you won't be able to repay the sum. It is better to borrow from a friend or family member instead. Beware they are the most expensive type of loan, if not paid within the due date.
You should use cc only at the secured websites, i. e. sites starting with https... and with a green padlock icon.
You should never prepond an expenditure; for if you default you'd have to pay higher finance charges.
Q. What if I default payment of cc dues?
A. If you have money, pay the dues forthwith.
If you don't have money, try to pay as much and as early as you can.
You should never prepond an expenditure; for if you default you'd have to pay higher finance charges.
Q. What if I default payment of cc dues?
A. If you have money, pay the dues forthwith.
If you don't have money, try to pay as much and as early as you can.
Q. What if I do not wish to pay the credit card dues at all?
A. If you do not pay the credit card dues delibrately, it would impact your credit history and your credit worthiness. Moreover, the banks would report this information to the statutory or legal credit bureaus, e.g. CIBIL etc. Thus, it would decrease your creditworthiness. It would also cause problems in future when you would apply for any type of loan. I have also heard that people with delinquency record do not get the visa of a few countries.
If you are suffering from a financial crisis, and do not have cash, talk to your bank for settlement. Although, it would impact your credit history, the outstanding amount would not increase after the settlement.
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