Credit Card Terms Everyone Should Know
If you are applying for a new credit card, you should be aware of all the details about the credit cards. And if you are applying for the new credit card for the first time, understand the below terms that you will come across while using the credit card. In this article, we will discuss all the Important credit card terms everyone should know while using a credit card or interested to buy a new Credit card.
Most of the credit cards charge a fee for using the credit card every year. This fee is fixed depending on the type of credit card you are using. Of course, there are credit cards which are lifetime free and there are no annual fees on such credit cards. But there are only a bunch of credit cards which are lifetime free and these have fewer offers. But a lot of credit cards have a fixed annual fee that is charged to your credit card and will reflect in your credit card statement once in every financial year.
There is also a Joining fee for some of the credit cards. This is a one-time fee that is to be paid at the time of getting the credit card. You will be charged this joining fee on your credit card in the first month after getting the credit card and will reflect in your credit card statement.
Annual fees of top credit cards in India are as Below
|Credit Card||Annual Fee||Best Suited for||Minimum Income Eligibility||Apply|
|Axis Bank Ace Credit Card||₹499||Cashback||Communicated at the time of sourcing|
|Amazon Pay ICICI Credit Card||Nil||Online Shopping & Cashback||Communicated at the time of sourcing||Apply for Credit Card|
|HDFC Regalia Credit Card||₹2,500||Travel & Shopping||₹ 70,000 p.m.|
|IndianOil Citibank® Platinum Credit Card||₹1,000||Fuel||₹25,000 p.m|
|SBI SimplyCLICK Credit Card||₹499||Rewards||₹20,000 p.m.|
|Citi PremierMiles Credit Card||3,000||Air Miles||₹25,000 p.m.|
|SBI Card Elite||₹4,999||Travel & Movies||₹60,000 p.m.|
|YES FIRST Preferred Credit Card||Nil||Shopping & Travel||₹1,20,000 p.m.|
|HSBC Cashback Credit Card||₹750||Online Shopping||₹33,333 p.m.|
|Standard Chartered Super Value Titanium Credit Card||₹750||Shopping & Fuel||₹55,000 p.m.|
The credit limit is the maximum amount you can spend on your credit card without paying any penalty. While issuing the credit card the issuing company will take into account several details such as the salary of the person and the total worth of the individual to decide on the credit limit that will be given to the person. Initially, the company gives very small credit limit but gradually it increases the credit limit as you keep on using the credit card.
Hence if you keep on using the credit card for years and keep on paying all the dues on time then your credit limit will be increased by the credit card company.
If you try to spend more than your credit limit in with a single billing cycle, you may incur penalties and in case of some of the credit cards, you will nor be allowed to spend more than the credit limit. But some credit card companies based on your risk profile allows you to spend more than the credit limit but with a penalty for overspends.
Credit Score – one of the Important Credit card terms everyone should know
The credit score is the financial risk profile of an individual that is developed by the centralized credit rating agencies. This is indicated in terms of a score on a scale that is different for different rating agencies. The score is what tells if you are a high-risk individual or a low risk involved individual when it comes to on-time payments and chances of defaulting the payments.
Banks and financial institutions while issuing new credit cards or loans to individuals will access and check the credit score from these credit rating agencies and decide whether to grant the loan/credit card or not. And also based on the credit score banks will offer the best interest to good score individuals and high-interest rates to Bad score individuals.
The credit score is calculated by the rating agencies from the data that is received by the Rating agencies about your payments and spends every month from the banks and financial institutions. The financial institutions share about all your payments, spending and details to the rating agencies.
Annual Percentage Rate
The annual percentage rate is the rate of interest that is charged on the spending amount in case of late payments or defaulted payments. It also indicates the interest that is charged on the amount that is used in the form of the Balance transfer, Cash advances and other fees.
Due Date – Credit card terms everyone should know
Due date is that date by which the dues of the credit card as shown in the credit card statement are to be paid without any late payment charges and interest. If the payment is not paid before the date, then the individual credit card is charged with late payment penalty and also the interest will start to be levied on the amount pending to be paid.
The grace period is the period before which the dues of the credit card need to be paid without incurring any interest rates or late payment fees. If the dues are not paid before the end of grace period then the interest will start to apply on the due amount and also a penalty.
Late Payment Fee
Late fee payment is the fees that are charged to the credit card in case of non-payment of dues before the mentioned date on the credit card statement. The late payment fees will vary depending on the amount of due you have in the credit card statement that is sent to you. The late payment fees if wanted to be avoided, on-time payment of credit card dues should be followed. incurring of late payment fees will also affect your credit score badly as it indicated non-payment of dues before the due date and is a negative thing in credit score.
When you receive the credit card statement at the end of the billing period, the statement contains all the details of your spending. And two important amounts are mentioned. They are the Total amount due and the minimum amount due.
Total amount due is the amount that is due on the credit card which if paid will clear all dues of the credit card.
But minimum due is the minimum amount you are supposed to pay before the mentioned date and still maintain the good relation with the credit card and the remaining amount from the Total due after removing the Minimum due will be charged in the next billing cycle with the interest for that period.
Security code or popularly known as CVV(Card Verification Value) is a security feature of the credit card that ensures that the card is present with the person who is carrying out the online transaction. It is a level of security for an online transaction that is in place to avoid any fraud. It ensures protection from using the card without physically having the card with them.
Bottom line – Credit Card Terms Everyone Should Know
It is important that when you are using the credit card or planning to take one, you should be aware of all the important terms. Without which you might get into confusion on different things.