I would like to explain few basics if Credit Card which are not very well understood by consumers.
1. What is a Credit Card ?
A credit card often referred to as plastic money, is a card, which is handy to carry and use for shopping or buying goods and services. You use your card to BUY a pair of shoes. You now owe the credit card company the amount paid at shoe store which will be billed to you, at a regular time interval, usually 30 days. More detaisl available here.
2.How is Credit Card different from a Debit card ?
A debit card is authorized only if their are sufficient funds in the account. While on credit card it depends on the cerdit line the issuing company has provided you. The basic difference is in debit card, you pay your own money and in acse of credit card, the issuing company pays for you to whom you have to pay later.
3.What’s the difference between secured credit cards and unsecured credit cards?
Secured credit cards are usually given to those with bad or no credit history. A deposit is made, say Rs5000, which gives the customer Rs500o limit. The customer isn’t allowed to spend more than the amount of the deposit. As the deposit decreases, so does the amount the customer is allowed to “charge”. That’s why these cards are sometimes called prepaid credit cards, or bad credit credit cards(In Western countries, every individual has a credit history, will come to India soon. A person with bad credit history is known to have “bad cerdit”) An unsecured credit card is granted to those with a good credit record, because they have a history of paying their bills on time.
4. How are my credit card finance charges calculated?