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The Advantages and Drawbacks of a Credit Card in Hindi | By Ishan
A credit card allows you to borrow money from a bank to make purchases, whether you’re buying a burger or a round-trip ticket to France. As long as you pay back the money you borrow within the “grace period” of 25-30 days, you don’t have to pay extra. If you don’t pay it back in that time period, you’ll have to pay interest — a percentage of the money you owe the bank — on top of what you borrowed.
Choosing a credit card: When you’re deciding which credit card to get, ask yourself this question: Will I be paying interest on my debts?
If you pay your credit card balance in full and on time each month, you won’t be charged interest. In that case, it’s worth it to get a credit card with rewards. When you use these cards, you get points or airline miles as well as cash. However, rewards cards have higher interest rates — high enough to wipe out the value of the rewards you earn. That brings us to what to do if you do carry a balance (in other words, you don’t pay off your debt every month). You’ll want to minimize your interest payments, so you should pick a credit card that has a low interest rate.
Banks such as Chase, Bank of America and Wells Fargo issue your credit cards. The bank determines your interest rate, fees and rewards, so it’s important to find a bank that offers a card you like. Transactions can only be processed through a network like Visa Mastercard, American Express, Mastercard, and Mastercard. The network doesn’t really affect the features on a card, except for such perks like rental car insurance or price protection. The network will determine where the card can be accepted.
The better your credit score is, the more cards you are eligible for. For those who have excellent credit, you will be eligible for the greatest rewards rates, the most attractive perks and lowest interest rates.
Incentives and fees: There are three ways that credit card companies can make money:
1.Transaction charges to merchants for each use of credit card
2.Interest payments when you don’t pay off your debt in full
3.Fees such as annual or late payments
You don’t have to worry about that first one. Merchants are not affected by transaction fees. Be concerned instead about interest and fees.
If you have a rewards credit card, remember that issuers don’t give those points out of the goodness of their hearts. Many people think they earn more in rewards than they pay in interest, but if you carry a balance, that’s rarely the case. If you think there’s a chance you won’t pay off your balance every month, steer clear of rewards cards.
There are many fees associated with credit cards, including an annual fee and cash advance fees. Late payment fees can also be charged. Most cards nowadays don’t have an annual fee unless they offer big rewards or are designed for people with less-than-good credit, but make sure to make at least the minimum monthly payment on time, or you may be slapped with a late fee and a higher interest rate — and you might even see your credit score suffer.
REWARDS PROGRAM SPECIFICATIONS: This section will detail how your rewards card works and what you can do to redeem them. This section is important. Numerous credit cards reward programs offer great benefits, including cash back and points that can be used to get free travel. But others aren’t all they make out to be — paying minuscule rates or giving you rewards only for crummy merchandise you don’t want or gift cards you’ll never use.
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