Basics of credit card involves informations about its structure, functioning, services, facilities, access mode, interest rates, variants, and many more. Credit cards are not a homogeneous commodity, it is variable in nature which changes in accordance with the issuing company and scheme. Hence any customer interested in accessing credit card must know the basics of it, especially the novice ones. These basics will give them an overview of the credit cards' overall market and would consequently help them in choosing the right one out of the basket. Due to fiercely competitive market of credit cards, the companies issuing them offer many sops for the consumers which might distract them from their real purpose. So, knowing the fundamentals of credit cards would definitely make them fundamentally strong in deciding and picking up the right credit card fulfilling his specific needs.
Credit Card gives financial flexibility to the consumers. It helps to purchase something without having to pay for it immediately. The credit card issuing company makes the payment on behalf of the customer but the customer in turn remains liable to pay the outstanding amount to the company within a definite period of time which may vary (from 20 to 55 days)depending upon the credit card type and the issuing company. If the customer fails to write-off the outstanding payable amount (full or partial) due to the company within the specified time-frame then the company would charge a monthly interest rate on the amount outstanding. The interest free period of payment is known as the Grace Period. Rate of Interest charged by the credit card issuing company may vary from scheme-to-scheme and from company-to-company.
Mainly there are two variants of Credit Cards :-
• Secured Credit Cards
In this type of credit card, the deposit account of the customer acts as the security for the credit card outstanding.
• Prepaid Credit Cards
This is the basic concept about the credit card and it only tries to give an overview.