Q: Do all credit cards feature an annual fee and joining fee?
Ans: No, not all cards attract an annual fee and/or a joining fee. In the case of basic credit cards, there is usually no annual fee; however, cards that have an annual fee often provide more benefits than the zero annual fee cards.
Q: Can I get cash from the ATM using my credit card?
Ans: This facility is known as a cash advance. You can withdraw a part of your total credit limit as cash from an ATM. But such cash withdrawals carry additional charges and feature a higher interest rate than your card-based purchases.
- How to earn and use credit card reward points?
Every time you use your credit card, you earn some reward points. Accumulated reward points can be redeemed against gift vouchers, merchandise or a direct statement credit. The rate of rewards differs from one card to another and also based on spending. For example, some cards may offer extra rewards on grocery spend while another card may give you more rewards when you book flight tickets or hotels.
Some cards offer cashback instead of reward points. These are credited directly into your credit card account, unlike reward points that have to be redeemed. Some of the best cashback cards in India are HDFC MoneyBack, Citibank Cashback, IndusInd Pinnacle, and Standard Chartered Manhattan Platinum.
Read More: Everything you need to know about Credit Card Reward Points
Q: Can my credit limit increase later on?
Ans: Credit limits are revised from time to time by the card issuer. This usually takes into account your previous payment track record; however, your limit may also be downgraded if you have missed multiple payments on previous bills.
Does credit cards charge interest rate for non-payment?
The interest rate is applied on any balance you owe on your card. Credit card interest rates are the highest among various debt instruments available to the customer. In most cases, interest rates start at 18% and may go up to 45% annually based on various factors such as the type of card, card issuer policies and various other factors.
You can check the details of credit card interest rates charged by different lenders here.
Q: What is a secured credit card?
Ans: A secured credit card is one that is issued against an asset say Fixed Deposit. It can be a good beginning for those who are not eligible to get a normal (unsecured) card. Leading banks like SBI and HDFC offer secured cards against fixed deposits.
Q: What is the difference between rewards and cashback?
Ans: Rewards can be earned in the form of points that can later be redeemed against gift vouchers or statement credit whereas cashback comes directly into your card account. Most of the cards offer rewards and only a few provide cashback facilities.
- Can I convert my credit card purchases into EMIs?
Yes, you can convert your big-ticket purchases in easy EMIs as per the applicable EMI options available with your credit card. The interest rate on credit card EMIs varies from lender to lender, thus it is better to check the interest rate beforehand. Also, some lenders in collaboration with big brands and online stores offer discounted or no interest EMIs for their customers. You can check EMI options on your credit card using your net banking/credit card app or call bank customer care for more information.
- How to upgrade to a new credit card?
Mostly people upgrade to a new credit card when either they have low credit limit or they are not satisfied with the features offered with their existing credit card. In both the cases getting a new credit card is the most feasible option You can either apply for a new credit card through bank or look for upgrade option on your existing credit card. You can also compare credit cards at Paisabazaar.com and then select the one that best suits your requirement.
However, you should be considering the below mentioned factors before moving on to a new credit card:
Increased Credit Limit: This will not only increase your spending limit but will also help in improving your credit utilization ratio.
Spend Based Benefits: if you already have a credit card that has offers on fuel then no point having another one with same features. Look for cards that offer other benefits like travel, cashbacks, dining, movies, etc. depending on your spending habits.
Credit Score: Having multiple credit cards will divide your spend between them thus bringing your credit utilization on a single card down. If you keep the utilization ratio below 40% for all your credit cards your credit score will improve.
Card Fees & Charges: Getting a new credit card will also increase the burden of paying annual fees for the same. Also, the penalties on your new card will be revised depending on its annual fees. Thus, always consider the annual fees along with other charges before applying for a new credit card.
- What are Add-On credit cards?
Add-on credit cards are issued under a primary credit card and all transactions are directed to a single account for the payment of dues. It is useful for students who are living away from their parents and also for those who cannot have a card of their own.
Mostly, the credit limit on an add-on card is the same as that of the primary card, but according to certain bank conditions, the credit limit for supplementary cards is set lower than that of the primary card. If you have been issued more than one add-on card, the sub-limit decided will be distributed equally among the add-on cards to match the total limit of the primary card. This sub-limit will also apply to any ATM withdrawals. The terms and conditions related to add-on cards may vary from one bank to another.
The information about all the transactions that will be conducted is recorded on one primary account. So, if you hand over the additional card to someone else, you can also keep track of the withdrawals and transactions along with the exact dates. Rest all features & benefits of the add-on card will be same as that of the primary credit card.
Q: What is a premium credit card?
Ans: Premium credit cards offer extra benefits on lifestyle, travel, entertainment, dining, etc. and they also charge a substantial annual fee. International airport lounge access, concierge service, air accident insurance are some premium card features.
Q: What is the credit card balance transfer?
Ans: Some credit cards offer the facility of transferring outstanding balances on other cards, consolidate the debt and pay back in EMIs. Banks also offer low introductory offers to encourage users to transfer balances from other cards.
Q: Are co-branded credit cards available in India?
Ans: A number of banks have collaborated with different brands to offer co-branded credit cards in India. Air India SBI Signature Card, Axis Bank Vistara and Amazon Pay Credit Card by ICICI Bank are some co-branded credit cards in India.
Q: What are milestone benefits on credit cards?
Ans: Banks offer cardholders bonus rewards or shopping vouchers on reaching a particular spending limit within a specific period. This is termed as a milestone benefit.
Q: My Credit Report does not show information on my new credit card. Why?
Ans: Usually, it takes up to three months for a new loan or credit card to reflect on your credit report. If it does not reflect even after three months, you should contact either your bank or the credit bureau.
Q: What is a lost card liability cover?
Ans: This is a zero liability benefit offered on most of the cards under which the card user will not be liable to pay any amount against the expenses occurred during the period between card loss and the user informing the bank. Some banks also offer credit card protection plan that offers additional security cover to your credit card in case of card loss or theft.
Q: Do credit cards come with specific cash withdrawal limits?
Ans: Yes. The cash withdrawal/advance limit on your card is pre-set and communicated at the time of credit card approval.
Q: How to read a credit card statement?
Ans: The main components of a credit card statement are statement date, payment due date, total amount due and minimum amount due. These are mentioned usually at the start of the statement. The second part contains detailed information about transactions.
Q: What is the minimum amount due?
Ans: If you cannot pay the entire outstanding amount, the bank gives you the option of paying a minimum amount after which you will not have to pay any late fee. However, interest will be charged on the remaining balance.
Q: How can I pay my credit card bill?
Ans: There are various ways to pay your bills such as net banking, mobile banking, bill desk, NEFT, cheque, etc. Alternately, you can also walk into the nearest bank branch and make an upfront payment over the counter. However, cash payment attracts a certain fee.
Q: What does credit limit mean?
Ans: The credit limit is the total amount sanctioned by the bank on your credit card. This is the maximum amount you can use on your card. The bank decides the credit limit on the basis of your credit score, income and maximum limit on your existing credit cards. You can request a limit enhancement after a few years of usage but the approval of it will be at the bank’s discretion.
Q: What is the difference between a credit card and a debit card?
Ans: The basic difference between a credit card and a debit card is that debit card is connected to your savings or current account whereas credit card is a type of loan taken from the bank. In case of a debit card, the amount is directly deducted from the connected savings/current account and there are no interest charges on its usage. However, in the case of a credit card, the amount is deducted from your credit limit.
Q: Do credit cards offer protection against fraud?
Ans: Credit cards are secured with chip and PIN, thus reducing the chances of fraud. Every time you make an online payment, you receive an OTP on the registered mobile number which you can use to authenticate the transaction. Most of the credit cards come with zero lost card liability cover which means if your card is lost or stolen and you inform the bank immediately, the card will be blocked. This way, the cardholder has limited liability in case of such fraud.
Q: What is the credit utilization ratio?
Ans: This is the ratio of your card usage to the total credit limit on your credit card. For example, if the total credit limit is ₹ 1 Lakh and you have used ₹ 30,000 out of it; your credit utilization ratio will be 30%. You should always try and maintain the ideal credit utilization ratio of 30% on all your cards.