A credit card is one of the most useful financial tools today. It looks like a normal debit card, but the way it works is different. Instead of using your own money, you use the bank’s money to pay for things, and you can pay it back later.
Let’s understand how credit cards work and what you should know before using one.
How Does a Credit Card Work?
When you use a credit card to buy something, the bank pays the money to the shop or website for you. Later, you have to repay the bank.
The bank gives you a credit limit, which means the maximum amount you can spend with your card in a month. For example, if your credit limit is ₹50,000, you can spend up to ₹50,000 using the card.
Every month, the bank will send you a bill for the total amount you spent. You can either pay the full bill or a minimum amount before the due date.
Benefits of a Credit Card
Cashless Shopping: No need to carry cash. Pay easily in shops, restaurants, or online.
Emergency Use: Helpful when you don’t have money but need to make an urgent payment.
Rewards & Cashback: Many cards offer points, cashback, and discounts on shopping, fuel, travel, and more.
Build Credit Score: Using a credit card wisely improves your credit score, which helps in getting loans easily in the future.
Things to Keep in Mind
Pay on Time: Always pay your credit card bill before the due date. If you miss it, you’ll have to pay high interest.
Avoid Overspending: Don’t spend more than you can repay. It can lead to debt.
Understand Charges: Know about annual fees, late payment charges, and interest rates before applying for a credit card.
Should You Get a Credit Card?
If you can manage your expenses and pay your bills on time, a credit card is a helpful tool. It makes shopping easy, offers benefits, and helps build your credit history. But if you often forget payments or overspend, it’s better to use a debit card.
Comments
Post a Comment