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How to Use a Credit Card

You can use the credit card at the below-mentioned places to conduct transactions �

• At point of sale (POS) merchant terminals
• On online shopping websites, e-wallets, etc.
• At ATMs to withdraw cash

About how to use a credit card � it�s simple.

For processing a card-present transaction such as an ATM cash withdrawal and card-swiped transaction, you need to enter the 4-digit PIN.

For most of the online transactions, you need to enter your card details. The PIN is seldom asked for online transactions.

Credit Card Interest Rates

When you don�t pay the total outstanding amount on a credit card by the due date, you�re automatically opting for the revolving credit facility. This means the borrowed amount which is not repaid on time attracts interest or finance charge.

The interest charge is also applicable when you pay only the minimum amount due or anything less than the total amount due.

Further, cash withdrawals attract interest from the date of the transaction till the amount is repaid in full.

The interest rate is charged at a monthly percentage rate or an annual percentage rate (APR) and varies from card to card. The issuer will communicate the rate of interest at the time of card issuance.

Interest rates charged by top banks are listed below.

Credit Card Interest-Free Period

When managed properly, a credit card acts as an interest-free credit line. This means you don�t have to pay any interest if the borrowed amount is repaid in the stipulated time.

The period between a transaction date and the credit card bill payment due date is called the �Interest-Free Period�.

If you pay the transaction amount on or before the due date, you don�t have to pay any interest, hence the in-between period is termed as Interest-free period or grace period.

The grace period varies for each credit card transaction and the typical period ranges from 30 to 45 days. Transactions carried out at the beginning of your credit card billing cycle would provide you with a longer grace-period.

However, the grace period is not applicable if the previous month's due has not been paid in full.

Also, cash withdrawals using a credit card are not eligible for grace period. Interest on such transactions would be levied from the withdrawal date itself.

The interest-free period offered by top banks is as follows

Credit Card Statement

Credit card statement (or credit card bill) is generated every 30/31 days. The bill generation date depends on the date on which the credit card is first issued, and the same date will be followed for the subsequent months.

Besides the bill amount which is also called the outstanding amount on the card, the statement also provides a detailed history of all the transactions conducted during the billing period.

It also reflects the total credit limit, available credit limit, cash limit, due date and other related information.

The statement is typically mailed to the cardholder�s registered e-mail every month. However, if the total outstanding balance is less than a certain cut-off, say Rs.200, no statement will be generated.

Credit Card EMI

Credit card EMI is one of the useful features offered on credit cards. There are various options to use the EMI facility.

1. Opt for EMI while transacting
2. Convert to EMI after the transaction

Credit cardholders with the first option can convert their purchases instantly into EMI while carrying out a transaction. However, the product/service or the retailer should have partnered with the card issuer.

The second option allows the users to convert any of the transactions or the total outstanding on the card into easy monthly installments (EMI).

However, the request for conversion should be made within a specific period from the date of the transaction, say 20-30 days.

While availing the facility, cardholders have the option to choose the repayment period which typically ranges from 3 to 24 months.

Some issuers offer 0% interest while the others charge a low or normal interest rate. Furthermore, a processing fee of 1-2% of the converted amount may also be levied.

Once you opt for the facility, you need to repay the EMI amount every month. The associated principal amount and the interest charge, if applicable, will be added to the minimum amount due on the card.

Credit Card Interest-Free Period

When managed properly, a credit card acts as an interest-free credit line. This means you don�t have to pay any interest if the borrowed amount is repaid in the stipulated time.

The period between a transaction date and the credit card bill payment due date is called the �Interest-Free Period�.

If you pay the transaction amount on or before the due date, you don�t have to pay any interest, hence the in-between period is termed as Interest-free period or grace period.

The grace period varies for each credit card transaction and the typical period ranges from 30 to 45 days. Transactions carried out at the beginning of your credit card billing cycle would provide you with a longer grace-period.

However, the grace period is not applicable if the previous month's due has not been paid in full.

Also, cash withdrawals using a credit card are not eligible for grace period. Interest on such transactions would be levied from the withdrawal date itself.

Various Elements Printed on a Credit Card

A credit card might look like any other card with number, logos and other information. But are you aware that each element on a credit card has a purpose? This section will help you understand the significance of each and every element printed on the front and rear side of a credit card.

Let's discuss the elements on the front-side of a credit card.

• Credit card number: The 16-digit number is one of the prominent elements of a credit card. If you think it's a random, machine-generated number, you're wrong. Each digit or a set of digits of the number not only provide specific information but are also used to identify the authenticity of the card, just by doing a simple math.

• The first digit of the 16-digit number is the Major Industry Identifier (MII) and indicates a specific industry that issued the card. For banking and financial institutions, the digits 4 and 5 are assigned by the regulatory. Hence most of the credit cards numbers issued in India begin with 4 and 5. While Visa credit cards begin with 4, MasterCard powered card begin with 5. American Express cards, on the other hand, begin with 3.

• The next 5 digits along with the first digit represent the issuer or the bank. They are thus called Issuer Identification Number or Bank Identification Number (BIN). Each bank uses a different sequence of IIN. Hence by looking at the first 6 digits, one can identify the issuing authority.

• The digits 7 to 15 contain the primary account number of the credit card. The number is unique for each cardholder. The number is crucial to identify the customer hence are often masked in all the bank communications.

• The last digit, the 16th, is called the check digit as it is used to check the accuracy of other digits on the card. The last digit can be generated by applying a mathematical formula called the Luhn Algorithm to the previous digits. One wrong number will give a different result and that's how inaccuracy of the digits will be identified.

• The logos and names on the credit card: The next prominent components on a credit card are the issuer's logo, the name of the card, card networks such as Visa, MasterCard, RuPay, etc., the cardholder's name, and the validity date.

• The chip and the contactless icon: These are the new entrants, we can say. With the Reserve Bank of India (RBI) mandating the conversion of all magnetic stripe-only cards into EMV-chip-based cards, all the new credit cards issued after 31 January 2016 are chip based. If your card is upgraded, you can see an EMV chip on the front side.

Another latest feature that has been introduced by credit card issuers is the contactless payment feature. If your card has the feature, you will find a symbol similar to a Wi-Fi symbol on your card.

Now let's move on to the back-side of a credit card.

• Magnetic stripe: Despite the introduction of EMV chip-based cards, the magnetic stripe, which carries all the crucial account information, still exists till the time all the retail terminals in India are upgraded to accept chip-based cards. This means, even though you receive a credit card very recently, it's likely that you will see both chip and stripe on your card.

• CVV: The CVV or Card Verification Value is a security code that is used as a fraud-prevention tool. The CVV is typically used for online or card-not-present transactions. While VISA and MasterCards have 3 digits in the CVV, Amex has 4 digits.

• Signature box, hologram, and others: The signature box is another security feature on a credit card. Every cardholder needs to sign in the box to make the card legally valid. In case suspicious cases, the signature on the card will be cross verified with other signature proofs the cardholders carry.

The hologram is the glittering little sticker that prevents physical copying of the card. It contains various layers with images imprinted at different angles. Its design makes it hard to copy using a scanner or other instrument. Hence, it also acts as another security feature on the card.

Features of a Credit Card

Banks offer amazing features on their credit cards. These features vary depending on the card provider and the type of credit card that people purchase. Some of them are as follows:

Reward Points Program: Most credit cards offer a reward points program, which allows cardholders to earn reward points on every transaction they make using their cards. A few exceptions to it is that fuel transactions, insurance payments, gold or gold jewellery purchases, utility bill payments, cash and EMI transactions are typically not eligible for reward points.

The accrued reward points can be redeemed for various options offered in exclusive rewards catalogues provided by the issuers. However, card members need to earn minimum reward points before going for redemption.

Airport Lounge Access: Complimentary airport lounge access and membership to Priority Pass Program are one of the most common features offered on most credit cards. Though you may not find the features on a basic credit card, most next to basic credit card offers complimentary lounge access with a limited number of visits per year, free membership to airport priority pass programs and others. With such a feature on credit card, members can enjoy free lounge visits to both domestic and international airports.

Fuel Surcharge Waiver: Another common aspect offered on most credit cards is the fuel surcharge waiver facility that waives off the 1% surcharge that is typically charged on all card transactions conducted at petrol stations.

Insurance Coverage: While some premier cards provide a comprehensive insurance policy that provides coverage against air accident, life, lost baggage, lost card, outstanding, etc. On other cards, the cover is limited to a few aspects.

Global Acceptance: Today, most credit cards that are issued in India are international cards and are accepted by various merchants all over the world.

Balance Transfer: Credit cardholders can transfer the outstanding balance of their existing cards issued by one bank to the credit card account of another bank. Doing so helps them in saving money and repaying the amount at a low rate of interest. Banks offer various balance transfer options to their cardholders allowing them to repay the amount on a monthly basis within a tenure of their choice.

EMI Conversion: The feature allows the credit card members to convert their credit card transaction into easy monthly instalments (EMI). They can either choose to convert the total outstanding on their card into EMI, a specific transaction, especially big-ticket purchases into EMI and can also convert merchant transactions into EMI.Generally, these plans have very attractive interest rates and different repayment tenures. The EMI conversion will be done with no other documentation and most of the times instant.

Lifestyle Benefits: By partnering with various merchants, credit card issuers provide attractive discounts and offers on various lifestyle categories including dining, shopping, travel, wellness, entertainment, etc.

Travel Benefits: Frequent travellers can make the best use of the travel credit cards that provide travel-related benefits to the cardholders. Some of the common benefits offered on travel credit cards include air miles accrual and redemption for air tickets, free travel insurance, discount offers on domestic and international flights, complimentary lounge visits, discounts on hotel booking, and concierge services.

Benefits of a Credit Card

Welcome Gift � Many banks offer a welcome gift to new credit card applicants once the card is issued to them. This gift can be in the form of bonus points, gift vouchers, discounts, etc. The welcome gift differs depending on the card and the bank.

Rewards Program � All credit cards generally have a reward program, which allows cardholders to earn reward points on every transaction they make using their cards. The amount of points that cardholders can earn per transaction is fixed and differs from card to card. The points that card members collect can be redeemed for various gifts that are listed in the rewards catalogue of the cards. These gifts can be discounts, product, services, cashback offers, etc. Some credit cards allow card members to redeem their points against air miles and cash as well.

Fuel Surcharge Waiver � Many banks offer fuel surcharge waiver to credit cardholders when they spend specific amount of money on fuel every month. This offer is available on fuel transactions made at all Indian petrol bunks.

Cashback Benefits � There are certain credit cards that offer cashback benefits to the customers. The amount of cashback that will be offered depends on the provider.

Lifestyle Benefits � Cardholders can enjoy various lifestyle benefits on their credit cards. Lifestyle benefits include dining, shopping, golf, wellness, entertainment, etc. privileges.

Travel Benefits � This is one of the major reasons for credit cards being so popular among people. There are some credit cards that offer amazing travel benefits to the customers. Travel benefits include air miles, airport lounge access, travel insurance, airline offers, hotel offers, etc.

Airport Lounge Access � Some credit cards offer complimentary airport lounge access to the cardholders. The offer varies from one bank to another. Some banks put a limit on the number of visits, while some others allow access only to Indian airport lounges.

Exclusive Privileges from Visa/American Express/MasterCard � Visa, MasterCard and American Express are three popular and recognized credit card variants. Depending on the variant of your card, you can enjoy exclusive lifestyle, travel, etc. offers from MasterCard/Visa/American Express.

Add-on Cards � Many banks allow their credit cardholders to apply for add-on cards for their immediate family members. Most card issuers offer add-on cards for free, but some of them limit the amount of add-on cards that one can apply for. Cardholders can enjoy all the privileges of their primary cards on their add-on cards.

Air Miles � Certain credit cards such as travel or Airline cards offer Air Miles to their customers. These miles can be JPMiles, Air India Air Miles, etc. Cardholders can collect these miles and redeem them to avail flight tickets and other travel benefits.

Documents Required to Apply for a Credit Card Online

Applicants can submit any one of the ID proof, address proof and income proof documents listed below

Apart from the above mentioned documents, banks can ask the applicants to submit other documents, if required.

Credit Card Eligibility

The eligibility criteria to apply for a credit card differs for each bank and also for each credit card. While the basic credit cards with nominal annual fee and minimal features require basic eligibility like constant source of income, good credit history or credit score, etc., the mid and premier range cards, which offer premier benefits and features, are typically issued to select group of people who meet the fixed criteria for income, credit score, and other parameters. To know your eligibility for a specific credit card, you can use the �Check Eligibility� feature offered on most bank websites. You can also use the same feature on Bankbazaar.com.

Why to Apply for a Credit Card Online through BankBazaar

BankBazaar has made the process of comparing and applying for personal financial products very easy. The website has a user-friendly interface that allows people to navigate easily without getting confused at all. There are many reasons for applying for a credit card through BankBazaar. Some of them are as follows:

Simplifies the application process � BankBazaar has simplified the credit card application process for Indians. Now, you do not have to visit the bank�s outlet or every bank�s website to compare cards and then apply for them. You just have to make a few clicks and you can get the same done online on BankBazaar website in no time.

Compare � Before buying any personal finance products, it is advisable that you compare them. The process of comparing these products can be tedious and a lot of people tend to avoid it, which leads to them buying products that do not benefit them. To solve this problem, BankBazaar introduced a platform where people can compare credit cards offered by different banks online at one place. This not only helps them in making an informed decision, but also in getting the best credit card available in India.

Apply � After comparing the credit cards, you can easily apply for the card you like on BankBazaar�s website itself. You can find the cards you are eligible for easily and then click on the �Instant Apply� button that is present next to the card of your choice. You can then fill up the application form and submit it online and within 30 minutes you will get a response.

Information � On the website of BankBazaar, you can find every single detail about credit cards. Besides this, the site also provides you with the latest credit card news and keeps you updated about the happenings in the Indian financial market.

24x7 Support � Apart from the above, BankBazaar provides 24x7 support to all its customers throughout the year.

Different Types of Credit Cards

Not everyone needs a same credit card. While some consider it as a line of credit, a few consider it as an instrument to track their expenses and for some others it's a way to get best deals on every purchase.

Today's customer-centric market has thus come with a solution for all - A credit card for every need. The partnership between card issuers and retailers made the categorization even simpler. From shopping to travel to dining to rewards, there are cards for each category.

Types of Credit Cards in India

Broadly segregated into two categories - Personal Credit Cards and Commercial Credit Cards, there are other types of credit cards that serve a different set of customers.

Personal Credit Cards

• Lifestyle Credit Cards
• Shopping Credit Cards
• Travel Credit Cards
• Reward Credit Cards
• Cashback Credit Cards
• Fuel Credit Cards
• Co-branded Credit Cards
• Premium/Super Premium Credit Cards

Lifestyle Credit Cards:

A lifestyle credit card is an "All-in-one" credit card that provides privileges across categories. From shopping to travel, rewards to cashback, entertainment to dining, you can enjoy special offers and discounts on most of them.

The Lifestyle Credit Cards typically come with a high annual fee and joining fee, which of course, is worth spending for the privileges offered by the cards. Some Lifestyle Credit Cards also have low or no annual fee and are designed for low-income group individuals.

Shopping Credit Cards:

The name says it all - Shopping Credit Cards are designed for shopaholics or frequent shoppers. While some cards provide deals and discounts for shopping online, others are designed for in-store shopping. Further, there are co-branded Shopping credit cards that provide offers and rewards on specific brands or stores.

Shopping Credit Cards are typically affordable with a starting annual fee of Rs.500. The benefits offered on the cards including the welcome gifts, reward points, deals and discounts, etc., revolve round the shopping category.

Travel Credit Cards:

Mostly providing air travel benefits, the Airline Credit Cards are best suited for frequent travelers. The features and benefits offered on the cards revolve around the air travel.

Reward points to air mile conversion, free flight tickets, complimentary airport lounge access, and accelerated rewards on air ticket booking, among others are some common features offered by Travel Credit Cards.

Most of the Travel Credit Cards are co-branded cards offered in collaboration of the card issuer and an Air Carrier or Travel Website. The annual fee of the cards ranges from Rs.500 to Rs.5,000 depending on the benefits they offer.

Reward Credit Cards:

Rewards Credit Cards offer accelerated rewards on most of the spending categories.

Credit Card issuers are providing a wide variety of redemption options ranging from gifts to air miles to cashback.

Reward Credit Card also provide welcome rewards, bonus rewards, milestone rewards, etc., in terms of reward points. Most of the cards offer reward points with unlimited validity.

Cashback Credit Cards:

Cashback credit cards offer cash back, cash rebates, and other money-saving benefits on most of the credit card spends.

While some care offer cashback in the form of reward points others offer direct cashback to the credit card account which can be used to pay off the card outstanding.

Fuel Credit Cards:

Partnered with major industry players like Hindustan Petroleum (HP), Bharat Petroleum (BPCL), Indian Oil, etc., credit card issuers are offering Fuel credit cards loaded with partner-specific benefits.

Fuel credit cards provide accelerated reward points on fuel spends, fuel surcharge waiver facility, reward points redemption against fuel purchases, and other value back benefits, enabling the users to keep the fuel costs under check.

Co-branded Credit Cards:

Credit card issuers are partnering with various retail merchants such as airline companies, e-commerce sites, fuel companies and other banks to make the shopping experience exclusive to the users.

Co-branded credit cards provide exclusive discounts and offers on merchandise or service offered by the partnered merchant.

For example, if a credit card is co-sponsored by Jet Airways, cardholders can expect offers and privileges from Jet Airways in terms of free tickets, discounts on flight bookings, accelerated reward points, reward points to JP Mile conversion among others.

Premium / Super Premium Credit Cards:

These are the expensive class of credit cards offered by most of the banks.The annual fee of the Premium credit cards typically range from Rs.3,500 to 25,000. But the privileges offered on the cards are in par with the rate charged.

The features and benefits offered on Premium Credit Cards cover most of the lifestyle categories.From exclusive welcome gifts, entertainment benefits, elite rewards programs, complimentary airline memberships, access to airport lounge programs to best Forex markup rates, the cards have it all.