credit card

You may have heard of horrifying stories where people lost their family members or couldn’t secure admission to their dream college just because they were not able to secure credit on it. But not anymore, a credit card is one such facility that helps you make your financial journey hassle-free by providing short-term interest-free credit up to a pre-specified limit hence clearing all the financial hurdles between you and your dreams. If you wish to know more about what is a credit card is before you apply for the best credit card in India, then you are at the right place. In this article, we will explore the basics you need to know about what a credit card is. So, let’s start :

A credit card is one of the facilities offered by banks and other financial institutions. It comes in the form of a plastic or metal card which can be used by customers to get short-term interest-free credit up to a prespecified credit limit. The credit limit is calculated on the basis of individual credit scores, earnings, and other relevant factors. Note that, if a customer fails to credit on time, a high-interest rate is changed on the pending amount.

Specialized Types 

  • Business Credit Cards: A business credit card is a credit card, specially designed to be used by businesses rather than for individual personal use. As business credit is different from personal credit, it is based on your business’s financial history and is tied to your social security number.
  • Secured Credit Cards: The credit card that requires a cash deposit when you open the account is known as a secured credit card. The cash deposit reduces the risk of the card issuer. If you fail to pay the bill, the card issuer can take money from your deposit. These credit cards are mostly offered to people with bad credit or no credit. 
  • Prepaid Credit Cards: A credit card in which money can be loaded in advance, which can be later used by you for spending is known as a prepaid credit card. A prepaid credit card is not linked to your bank account.
  • Digital Credit Cards: The credit cards which are available only in the online format are known as Digital Credit Cards. They are designed only to perform only online transactions.
  • Charge Credit Cards: The charge credit card is a type of credit card used for electronic payment. It charges no interest but requires you to pay the statement balance in full, usually monthly.

Features and Benefits

  • Fraud Protection: The Fair Credit Card Billing Act protects you from fraud by prohibiting credit card companies from holding you responsible for unauthorized purchases on your credit card if you report it stolen before the thief uses your credit card.
  • Rewards: Different types of credit cards offer different types of reward programs to you depending upon the card you are using. The most common rewards are cashback and reward points. The cashback is actual cash that you get as a certain percentage for every qualifying purchase back. The reward points are points in return for every qualifying purchase made using the card. The points can be redeemed for various offers ranging from gift vouchers, merchandise, and many more.
  • Build Credit History: A credit history is a record of your ability to repay debts. As credit card issuers typically report your account and activity to national credit bureaus, it helps you build a credit history. Good credit history can be used by you to secure easy loans from banks and other financial institutions.
  • ATM Cash Withdrawal: A credit card can be used to get a Cash Advance. A cash advance stands for the process of credit cards that allows you to withdraw cash from an ATM. However, if you obtain a cash advance at an ATM, you will be charged a cash advance fee.
  • Easy and Instant Approval: You can easily apply for a credit card online or offline. If you apply for a credit card online, you can get instant approval, i.e you receive a quick decision typically within a few minutes.

No matter at what stage you are in your life today, you will find at times you have to look for credit with no option left. These are the times when a credit card just like a true friend acts as a savior for you. We wish all the best to all the future credit card holders, hope it will help you make your financial journey hassle-free. All the best!


What is a credit card?

A credit card is a plastic card issued by a financial institution, such as a bank or credit union, that allows the cardholder to borrow funds to make purchases or withdraw cash. It provides a convenient and widely accepted method of payment.

How does a credit card work?

When a person makes a purchase using a credit card, the cardholder is essentially borrowing money from the card issuer to complete the transaction. The issuer pays the merchant on behalf of the cardholder, and the cardholder is required to repay the borrowed amount to the issuer within a specified period, usually on a monthly basis.

What are the benefits of using a credit card?

Credit cards offer several benefits, including:

  • Convenience: They eliminate the need to carry cash and provide a secure way to make purchases.
  • Rewards: Many credit cards offer rewards programs where users can earn points, cashback, or travel benefits for their spending.
  • Building credit history: Responsible use of a credit card can help establish and improve credit scores, which is important for future loan applications.
  • Purchase protection: Credit cards often come with built-in consumer protection features, such as fraud liability protection and dispute resolution.

Are there any fees associated with credit cards?

Yes, credit cards may have various fees, such as annual fees, late payment fees, cash advance fees, and foreign transaction fees. It’s important to review the terms and conditions of a credit card before applying to understand the applicable fees.

How should I use a credit card responsibly? To use a credit card responsibly:

  • Pay your balance in full and on time each month to avoid interest charges.
  • Keep track of your spending and stay within your budget.
  • Avoid maxing out your credit limit.
  • Regularly review your statements for any errors or fraudulent charges.
  • Only use your credit card for purchases you can afford to pay back.



In conclusion, a credit card is a financial tool that allows individuals to make purchases and borrow money from a card issuer. It offers convenience, rewards, and helps build credit history. However, responsible use is crucial to avoid accumulating debt and facing financial challenges. By understanding how credit cards work and using them responsibly, individuals can benefit from the advantages they provide while managing their finances effectively.

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